Is The Obamacare Mandate Loophole So Big It Applies To Everyone?

The Obama administration has carved out a swath of exemptions for Obamacare’s individual mandate that could conceivably apply to anyone who claims to have a “hardship” in obtaining health insurance.

In the application for an exemption, released by the Center for Medicare and Medicaid Services, there are 13 categories under which an individual can obtain one, including homelessness and bankruptcy. A 14th and final category states that people can also apply for an exemption if: “You experienced another hardship in obtaining health insurance.”

And what sort of proof is necessary? None.

“Please submit documentation if possible,” the application states (emphasis added).

An important caveat is that simply applying for an exemption doesn’t guarantee that the Department of Health and Human Services will approve it. Administration officials insist they won’t grant blanket exemptions to anyone under the hardship clause, which was designed for people who are in dire straits. They say the final category exists in the event of grave hardships they failed to anticipate.

But the open-ended language has baffled even those sympathetic to Obamacare.

“An individual applicant would still need to show that they had suffered a hardship, but the language is awfully open-ended. It is hard to imagine what they were thinking when the threw the door open this wide,” said Tim Jost, a health law professor at Washington & Lee University who supports Obamacare.

Salon columnist Brian Beutler put it more bluntly: “The individual mandate is riddled with loopholes large enough to drive just about every uninsured person in the country through,” he wrote. “It even troubles some of the law’s most steadfast supporters.”

Economists say the individual mandate is critical to ensuring that enough young and healthy people sign up for Obamacare and avoid an upward spiral of costs. The broader the exemptions, the more likely healthy uninsured people are to avoid buying coverage.

The tax penalty for noncompliance with the mandate to buy insurance in 2014 is the greater of $95 or 1 percent of household income. (In 2015 the penalty rises to $325 or 2 percent of household income.)

The Department of Health and Human Services responded to the criticisms.

“The Affordable Care Act requires people who can afford insurance to buy it, so that their medical bills are not passed onto the rest of us, which drives up health care costs for everyone,” said HHS spokeswoman Joanne Peters. “This form, which was published last December, allows a limited number of individuals who are facing hardship to apply for an exception. This exception also makes it easier to find insurance by allowing those individuals to access catastrophic-level plans.”

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