The White House had been under fire for months over the widespread reports of canceled policies, but rather than assuage those concerns with the new exemption, it runs the risk of opening one of the law’s most important (and most unpopular) features to more political meddling.
Congressional Republicans have already used it as an excuse to call for a blanket delay of the individual mandate, and some of the law’s most ardent supporters acknowledge that the administration seems to have cracked open a door that could be difficult to close.
“I think by itself this is a not a huge problem. This group should be relatively small,” Jonathan Gruber, an MIT economist who helped craft Obamacare, told TPM. “But I think that the administration has to hold the line here. More widespread cracks in the mandate could start to cause enormous problems for insurers.”
Senior administration officials had estimated Thursday that the number of Americans whose policies had been canceled and were struggling to find a new affordable health plan was less than 500,000.
That number shouldn’t be enough to disrupt the market, wrote Tim Jost, a health law professor at Washington and Lee University who supports Obamacare, for Health Affairs. But the insurance companies themselves disagree. They issued a warning, without much elaboration, that the decision could be a big problem.
“This latest rule change could cause significant instability in the marketplace and lead to further confusion and disruption for consumers,” Karen Ignagni, president of America’s Health Insurance Plans said in a statement.
The potential problem is this: Insurance companies priced their catastrophic plans with the assumption that only people under 30 would purchase them. By opening that product to an older population, it puts them at a financial risk that they didn’t account for — which, if that ends up costing them more than they expected, could hurt the market broadly.
Sometimes I pine for the good ‘ol days when the only pandora’s box I wrote about was the Privileges or Immunities Clause. Such simpler times.