Broad hard­ship ex­emp­tions could make man­date a paper tiger

Modern Healthcare - - NEWS - By Paul Demko

The Obama ad­min­is­tra­tion is ad­vis­ing unin­sured Amer­i­cans that they have just one week left to buy cov­er­age to avoid a costly tax penalty un­der the health­care re­form law’s in­di­vid­ual man­date. But ex­perts say it’s un­likely any min­i­mally so­phis­ti­cated tax­payer will have to pay the con­tro­ver­sial penalty in 2015.

Un­der the Pa­tient Pro­tec­tion and Af­ford­able Care Act, any in­di­vid­ual can seek a hard­ship ex­emp­tion from the cov­er­age re­quire­ment. There are 14 qual­i­fy­ing cat­e­gories, in­clud­ing for people who have had their ex­ist­ing health plan can­celed be­cause it was not com­pli­ant with Oba­macare re­quire­ments. There is even a cat­e­gory de­scribed on the hard­ship ex­emp­tion ap­pli­ca­tion as: “You ex­pe­ri­enced an­other hard­ship in ob­tain­ing health in­sur­ance.” The ev­i­den­tiary stan­dard ap­pears light: “Please sub­mit doc­u­men­ta­tion if pos­si­ble.”

The law’s sup­port­ers and op­po­nents agree the man­date is rel­a­tively tooth­less. “Ba­si­cally any­one who wants to be able to claim a hard­ship ex­emp­tion will prob­a­bly be able to,” said David Howard, a pro­fes­sor at Emory Univer­sity’s school of pub­lic health.

That has led con­gres­sional Repub­li­cans to ar­gue that the ad­min­is­tra­tion should agree to for­mally jet­ti­son the man­date. This month the GOP­con­trolled House voted to re­peal it for five years to fi­nance the re­peal of the Medi­care sus­tain­able­growth rate for­mula for physi­cian pay­ment—at a cost of mil­lions more unin­sured.

But to seek one of the hard­ship ex­emp­tions, people have to know those op­tions are avail­able. The law’s sup­port­ers, in­clud­ing the in­sur­ance in­dus­try, are not ea­ger to pub­li­cize them for fear that would re­duce the num­ber of people sign­ing up and drive up pre­mi­ums for 2015. Polls re­peat­edly have shown that a large per­cent­age of Amer­i­cans re­main ig­no­rant of ma­jor pro­vi­sions of the law, in­clud­ing that they can ob­tain gen­er­ous sub­si­dies to help them buy cov­er­age.

“I think (the ad­min­is­tra­tion) feels it’s im­por­tant legally and sym­bol­i­cally to have a man­date in place,” Howard said.

Still, some fear the law’s op­po­nents will en­cour­age a large num­ber of con­sumers to ap­ply for hard­ship ex­emp­tions to un­der­mine the cov­er­age ex­pan­sion ef­fort. At this point, no co­or­di­nated ef­fort by the law’s op­po­nents to ed­u­cate people about the ease of avoid­ing the tax penalty has be­come pub­lic. The con­ser­va­tive ad­vo­cacy group Free­domWorks, which pre­vi­ously or­ga­nized a cam­paign to en­cour­age young people to burn sym­bolic “Oba­macare cards,” did not re­spond to a re­quest for com­ment on the is­sue.

The Obama ad­min­is­tra­tion has stead­fastly re­fused to de­lay the man­date, de­spite paus­ing other pro­vi­sions of the law, in­clud­ing the re­quire­ment that businesses with more than 50 em­ploy- ees pro­vide in­sur­ance for their work­ers. In the first year, the tax penalty will be 1% of ad­justable gross in­come or $95, whichever is greater. That fig­ure rises to 2.5% of in­come, or $695, in 2016. In that year the Con­gres­sional Budget Of­fice es­ti­mates that 6 mil­lion in­di­vid­u­als will face penal­ties to­tal­ing $8 bil­lion.

The lack of pop­u­lar un­der­stand­ing of the law’s de­tails is one rea­son po­lit­i­cal ob­servers ex­pect en­force­ment of the penalty by the In­ter­nal Rev­enue Ser­vice to be lax dur­ing the 2015 tax sea­son. Un­der the ACA, the IRS can only en­force the tax penalty against unin­sured people by gar­nish­ing any in­come tax re­funds they are owed, which al­ready is a rel­a­tively weak en­force­ment mech­a­nism.

The Obama ad­min­is­tra­tion will have to pro­ceed cau­tiously in en­forc­ing the man­date, said Joe An­tos, a health­care pol­icy ex­pert with the con­ser­va­tive Amer­i­can En­ter­prise In­sti­tute. “Any­body who re­ally would qual­ify un­der any of these more spe­cific hard­ship cat­e­gories al­most cer­tainly is strug­gling with life,” he said. “The man­date is not even on the radar screen. Any politi­cian who fails to rec­og­nize that is go­ing to make it very dif­fi­cult for his party.”

Howard agreed. “They rec­og­nize that en­forc­ing it to the T would cause a lot of po­lit­i­cal prob­lems for Democrats in tight Se­nate and House races,” he said.

If the pub­lic re­al­izes that the man­date is rid­dled with loop­holes and that en­force­ment is likely to be weak, that could sig­nif­i­cantly di­min­ish en­roll­ment, par­tic­u­larly among the younger and health­ier con­sumers needed to cre­ate a bal­anced risk pool in in­sur­ance ex­change plans. But gen­er­ous sub­si­dies will still pro­vide a strong in­duce­ment to ac­quire cov­er­age for those who could seek out a hard­ship ex­emp­tion, said Karen Davis, a health pol­icy ex­pert at Johns Hop­kins Univer­sity’s school of pub­lic health.

“Nearly all of those are go­ing to be very low-in­come in­di­vid­u­als who are go­ing to qual­ify for sub­stan­tial sub­si­dies,” she said. “I just don’t see (this) un­der­min­ing the sta­bil­ity of the risk pool.”

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.