Individual Mandate Starts to Crumble
Late yesterday, the Department of Health and Human Services (HHS) announced that anyone whose individual insurance policy was cancelled due to Obamacare and now has to pay for a more expensive plan is exempt from the individual mandate until 2015.
You read that right. The individual mandate – the keystone of Obamacare’s coverage and funding structure – no longer applies to an estimated 5 million Americans.
This is HUGE. By granting this carve-out, the Obama administration has voluntarily weakened the mechanism that is supposed to guarantee insurance companies selling plans through an Obamacare exchange sufficient numbers of people to fill out their risk pools.
Now, suddenly, these companies are facing the very real possibility that millions of people will choose to hold off buying insurance until they get sick. The new exemption changes a consumer’s calculation. Prior to yesterday, all the emphasis was on signing up by the December 23rd deadline to avoid a 2014 tax penalty.
Now, for up to 5 million people, the decision point to buy insurance occurs when they get sick. Thus, insurance companies won’t get to spread the risk of illness by banking premium payments from healthy people. Many more people buying insurance going forward will need costly care the moment they sign up.
In other words, this move destroys the nature of insurance.
It’s also indefensible as a matter of justice to require the uninsured to comply with the mandate.
“Put more simply, Republicans will immediately begin calling for the uninsured to get this same exemption. What will the Obama administration say in response? Why are people whose plans were cancelled more deserving of help than people who couldn’t afford a plan in the first place?” asks Ezra Klein.
As I said in my column this week, Obamacare’s failures are completely that fault of its supporters. Republicans shouldn’t help fix something that is so broken. 2014 should be the year the GOP unites around a viable alternative to replace this monstrosity after it is repealed.