Individual Mandate Exemptions Expanded 

Of all the ill-conceived elements of the ACA, the worst may be how to enforce the individual mandate. It presents a conundrum for which there is no plausible resolution. If you don't enforce the mandate, the viability of the entire health insurance market is jeopardized because you need the healthy to pay for the chronically ill. So how do you collect from the massive number of uninsured who choose not to participate and cannot afford the penalty?  If you enforce the mandate only on those who can afford to pay the penalty, people rightfully cry foul because the penalty is not enforced fairly and you've already exempted employers from the penalty by delaying the employer mandate not one year but now two.

So what to do?

The administration has come up with a scheme of sorts to split the difference. So here it is: you keep the mandate in place, but administratively create loopholes so broad that anyone who wants to make noise can get an exemption . . . but you don't publicize it to the public because, if you did, everyone would do it...and you create an environment where the IRS is unable to effectively enforce the mandate because of all the plausible exemptions?

How did they pull this off? With an administrative rule that expands a previously established "hardship" exemption to anyone who had their insurance cancelled as a result of the ACA. This was quietly issued last week.

HHS decided that the wave of policy terminations qualified as a "hardship" that entitled people to a special type of coverage, a less expensive "Catastrophic Plan" designed for people under age 30 or people with a mandate exemption. HHS originally defined and reserved hardship exemptions for the truly down and out such as battered women, the evicted and bankrupts.

But amid the post-rollout political backlash, last week the agency created a new category: Now all you need to do is fill out a form attesting that your plan was cancelled and that you "believe that the plan options available in the ACA Marketplace in your area are more expensive than your cancelled health insurance policy" or "you consider other available policies unaffordable."

This lax standard-no formula or hard test beyond a person's belief-at least ostensibly requires proof such as an insurer termination notice. But people can also qualify for hardships for the unspecified non-reason that "you experienced another hardship in obtaining health insurance," which only requires "documentation if possible." And yet another waiver is available to those who say they are merely unable to afford coverage, regardless of their prior insurance. In a word, these shifting legal benchmarks offer an exemption to everyone who conceivably wants one, and makes it impossible for the IRS to enforce the mandate fairly.

You can't afford to provide unlimited healthcare for the chronically ill at the same price as the healthy unless you impose an everybody-in - nobody-out mandate. So the administration is trying to split the difference. Everybody in, unless we let you out, which we will if you push us hard enough, but we can't let everyone do it!