WASHINGTON — The Obama administration said Friday (february 28th) that it would allow some people to receive federal subsidies for health insurance purchased in the private market outside of health insurance exchanges. The sudden shift was the latest in a series of policy changes, extensions and clarifications by federal officials trying to help beneficiaries and minimize political damage to Democrats in this election year.
Federal officials said they had agreed to provide such assistance retroactively because technical problems had prevented consumers from using online exchanges to obtain insurance and financial aid in some states.
Gov. John Kitzhaber of Oregon, a Democrat, had specifically asked the federal government to allow financial assistance, in the form of tax credits, for people buying insurance outside the state’s troubled exchange. Other states running their own exchanges, including Hawaii, Maryland, Massachusetts and Minnesota, have also experienced technical difficulties, creating political problems for their governors.
The Obama administration’s decision came as a surprise because the Affordable Care Act is clear: Federal subsidies are available only to people who enroll in a “qualified health plan” through an exchange.
But some of the online state exchanges have not been working well enough to determine if people are eligible for coverage, one of the basic functions of an exchange. The exchanges are competitive marketplaces where consumers are supposed to be able to shop for insurance, enroll and get financial assistance to help pay premiums.
“We recognize that some states have experienced difficulties in processing automated eligibility determinations and enrollments,” said Aaron K. Albright, a spokesman for the federal Centers for Medicare and Medicaid Services. “We released guidance providing options to marketplaces to ensure eligible consumers have access to financial assistance.”
The new policy applies to people who — because of “technical issues” — were stymied in trying to buy insurance through an online exchange and signed up for a health plan outside the marketplace. They will now be allowed to sign up for coverage in the exchange and get federal subsidies “on a retroactive basis,” going back to the date on which they first enrolled in a health plan outside the exchange.
Representative Joe Pitts, Republican of Pennsylvania and the chairman of the Energy and Commerce subcommittee on health, expressed disbelief at the latest policy change.
“The administration is blatantly ignoring the law, paying subsidies to plans outside of exchanges,” Mr. Pitts said. “The unilateral delays and changes have been rampant.”
Until now, people who bought insurance outside an exchange were not eligible for subsidies.
Under the new policy, insurers may have to give refunds or credits to reimburse consumers for some of the money they spent on insurance premiums and co-payments before getting subsidies.
The subsidies can greatly reduce the cost of coverage. The Congressional Budget Office estimates that four-fifths of people buying insurance through exchanges will qualify for subsidies, with the government spending an average of $4,700 for each “subsidized enrollee” this year.
Sara Rosenbaum, a professor of health law and policy at George Washington University, said that by offering subsidies for insurance purchased outside an exchange, the Obama administration was avoiding a huge potential legal liability.
“People could have gone to court to obtain benefits denied without due process of law, because of a breakdown in government eligibility systems, and a judge would probably have ordered retroactive relief,” Ms. Rosenbaum said. “The federal government is voluntarily providing equitable relief that a court would have given.”
Mr. Kitzhaber thanked the administration, saying its action would “ensure that Oregonians who enrolled in health plans outside of our insurance exchange would still be able to claim tax credits that are a key benefit of the Affordable Care Act.”
Dr. Joshua M. Sharfstein, Maryland’s health secretary and chairman of its insurance exchange, said he was studying the new federal policy to see if it could be used in Maryland. Many “logistical details” would need to be worked out, he said.
The health law fix this week comes after the administration delayed the requirement for larger employers to offer coverage to employees; extended the deadline for people to sign up for coverage starting on Jan. 1; delayed the opening of online marketplaces for small businesses; and asked insurers to extend individual health care policies that had been canceled for not complying with the new federal law.
Source: New York Times, February 28, 2014