Health and Human Services Secretary Kathleen Sebelius
WASHINGTON (CBS NEWS) -- Trying to head off more bad
news over the chaotic rollout of President Obama's health care law, the
administration Thursday offered stopgap options so people whose existing plans
got canceled aren't penalized.
Monday is the deadline to buy health
insurance to get coverage by Jan. 1.
The Affordable Care Act requires all
Americans to have coverage or face a fee in the form of a tax penalty. But
millions of people saw their plans cancelled because they didn't meet new
standards in the law.
Health and Human Services Secretary Kathleen
Sebelius said in a letter to a group
of senators that she will use authorities in the law to issue a "hardship
exemption" from tax penalties to those who received cancellations and were
not able to line up new coverage.
The administration is also opening up a
special coverage plan created under the law for young adults. Regardless of
their age, Sebelius said people whose
plans were canceled will be able to buy a bare bones catastrophic plan intended
for those under 30.
"This is a common sense clarification of the law,"
HHS spokesperson Erin Shields Britt said in a statement.
"For the limited number of consumers whose plans
have been cancelled and are seeking coverage," he said, the steps offer more
Separately, the administration on Thursday
estimated at fewer than 500,000 those who have not yet found other coverage in
the wake of seeing their coverage canceled.
In addition, the department is setting up a
dedicated hotline for those who got cancellations, at 1-866-837-0677.
The insurance industry immediately
criticized the moves.
"This latest rule change could cause
significant instability in the marketplace and lead to further confusion and
disruption for consumers," said Robert Zirkelbach, spokesman for America's
Health Insurance Plans.
Only Wednesday, the industry had announced
its own accommodation - giving consumers an extra 10 days to pay January's
The Oct. 1 launch of the HealthCare.gov
website became an embarrassment for the administration after problems with the
online gateway to coverage froze out millions of potential customers.
But the biggest political damage to the
president has come from cancellations issued to at least 4 million people who
had individual plans they purchased themselves. Those plans did not pass muster
under the health care law, which generally requires more robust benefits.
Mr. Obama was roundly criticized for reneging on a longstanding promise that if you liked your
plan, you would be able to keep it under his health care law. The president
apologized, and then said insurers could extend those plans for one more year.
Most state regulators followed Mr. Obama's lead and gave insurance companies
the additional latitude, but it's unclear whether the problem has been fully
Although the website is now working more
smoothly, there's still a concern that technology problems may prevent some
people who got cancellations from signing up for a new plan. Consumers have
until Dec. 23 - Monday - to pick a plan if they want their coverage to take
effect Jan. 1, thus avoiding a break in coverage. The industry says it will
accept payment of the first month's premiums until Jan. 10. Timely payment is
required for the new plan to take effect.
"There still may be a small number of
consumers who are not able to renew their existing plans and are having
difficulty finding an acceptable replacement," Sebelius
wrote Sen. Mark Warner, D-Va., and several of his colleagues, adding,
"These consumers should qualify for this temporary hardship
Warner and fellow senators Angus
King, I-Maine, Jeanne Shaheen, D-N.H., Mary Landrieu D-La., Heidi Heitkamp,
D-N.D. and Tim Kaine, D-VA, had written Sebelius Thursday expressing concern
about the consumers her actions later addressed.
All issued a statement
late Thursday, after the moves were announced, saying they're pleased with
them. "This clarifies an option that will help those consumers who have
had their plans cancelled this year transition more smoothly into the
marketplace," the senators said.
Democrats generally praised the latest steps
as a commonsense backup in a difficult situation. Republicans panned the
administration action as another patch to an unworkable law.
Insurers are concerned that healthy
customers who potentially would have bought full coverage may now stay out of
the market, leaving the companies with a group of patients in worse health
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