Broad exemptions to Obamacare’s individual mandate, including one added secretly last year, make the mandate a paper tiger. In June the CBO confirmed this by raising its estimate of the number of people who could claim an exemption and sharply dropping its estimate of the number of people who will pay a penalty.
The Wall Street Journal reports, “almost 90% of the nation’s 30 million uninsured won’t pay a penalty under the Affordable Care Act in 2016.” In 2012 CBO said 18 million could qualify for exemptions. This year CBO said that number was 23 million. As for those who will wind up paying a penalty for non-compliance, CBO originally estimated 6 million people would pay. This year they dropped that estimate to 4 million people.
The individual mandate has long been viewed by supporters of the law as one key to making the math work out. It requires younger, healthier people who often go without insurance to buy a plan at an artificially high price. Because those people won’t utilize the services they pay for as often, they help subsidize the cost of insuring older, sicker individuals. Without the mandate in place, Obamacare could face a death spiral of increasing rates and fewer people signing up.
Initially there were 12 exemptions to the mandate, most of which were fairly targeted. But last December HHS added two more exemptions. One of those, an exemption for people whose insurance had been cancelled as a result of new Obamacare regulations, was highly publicized at the time.
The other exemption, number 14, was almost completely overlooked, in part because the administration kept it hidden from public view. As I documented in March of this year, exemption #14 was intentionally left off the public healthcare.gov web page listing such exemptions for three months. It finally was added one day after it was highlighted in a story at the Wall Street Journal.
There’s little reason to doubt why it was omitted. Exemption 14 is a catch-all so broad that even some of the law’s supporters admit it could apply to anyone. It grants an exemption to those who “experienced another hardship in obtaining health insurance.” Not only is this language incredibly vague, it also requires no documentation to back it up. One simply checks a box on the appropriate form and writes a brief description of the hardship.
Former head of the CBO Douglas Holtz-Eakin summed it up this way in a statement to the Wall Street Journal, “If your pajamas don’t fit well, you don’t need health insurance.” It’s doubtful anyone will actually try to claim a pajama exemption from the individual mandate, but if they did it’s not clear HHS would be able to deny their claim.