A new congressional report has estimated that more than 25 million Americans without health insurance will not be made to pay a penalty in 2016 due to an exploding number of ObamaCare exemptions.
The Wall Street Journal, citing an analysis by the Congressional Budget Office and the Joint Committee on Taxation, reported that the number of people expected to pay the fine in 2016 has dwindled to four million people from the report's previous projection of six million. Approximately 30 million Americans are believed to be without health insurance.
The latest report is likely to spark fresh concerns among insurers, who have maintained that the number of exemptions to the law's individual mandate are resulting in fewer young, healthy people signing up for health insurance. An insurance pool skewed toward older, comparatively unhealthy people is likely to result in premiums rising.
Under the Affordable Care Act, the fine for not purchasing health insurance is either $95 per adult or 1 percent of family income, whichever is greater. That amount is set to increase to $695 per adult or 2.5 percent of family income in 2016, with a total family penalty capped at $2,085.
The Act provided exemptions to the penalty for certain groups, such as illegal immigrants and members of certain Native American tribes or religious sects. The Obama administration has since added exemptions for hardships like domestic violence, property damage suffered in a fire or flood, or having a health plan canceled when ObamaCare came into effect this past October 1. One exemption, written as being for people who "experienced another hardship acquiring health insurance" does not require documentation.
Residents of 21 states who have opted not to expand their Medicaid program under the health law may also be exempt from the penalty. The Journal reports that more than 4 million Americans who receive subsidies through the federal ObamaCare exchange could qualify for hardship waivers if the subsidies are struck down in court.
The Affordable Care Act was narrowly upheld by the Supreme Court in June 2012 in a ruling based in part on acceptance of the administration's argument that the law's individual mandate was not a tax. Republicans have argued that the Obama administration has undermined its own argument by issuing so many exemptions and should scrap the mandate completely.
The Centers for Medicare and Medicaid Services told the Journal that approximately 77,000 individuals and families have requested an exemption as of this past April. However, that number is expected to rise because many exemption requests can only be claimed on tax returns filed in 2015.
The Obama administration has given people whose insurance plans were canceled because they did not meet ObamaCare's minimum coverage requirements an exemption that runs until October 2016. They are also allowed to buy a minimum amount of coverage originally available to people under 30.
Last Updated Aug 1, 2014 12:00 PM EDT
WASHINGTON -- A top official at the Centers for Medicare and Medicaid Services (CMS) told House members Thursday that there will likely be more "bumps" next year in enrollment in the federal health exchange set up under Obamacare.
"It won't be perfect," said Andrew Slavitt, who was recently appointed to join CMS - the Health and Human Services agency that administers Obamacare - as its principal deputy administrator. "I think we've got a committed team of people, though, that by and large are doing a very good job. But there will clearly be bumps."
Slavitt said that this year's enrollment in the federal exchange, though, will be a "vastly different situation" from last year's problem-ridden launch of the exchange's website, HealthCare.gov. Slavitt also pointed to early data out of states like Delaware and Washington, where premium increases were not as large as Obamacare opponents expected, saying that CMS is seeing "historically low growth" in health care spending.
The testimony came just a day after a Government Accountability Office (GAO) review found that HealthCare.gov has already cost $840 million to build and fix. The report not only found over $200 million in cost increases from September 2011 to February of this year, but it also showed that a government contract with Accenture, a consulting firm hired in January to fix the website, was granted for $91 million but increased in cost to $175 million by July.
Slavitt made it clear this was not a cost overrun, however. Accenture agreed to an initial amount of money in an "urgent situation" with the understanding that more money may be necessary, hence the increase.
Slavitt explained the Accenture contract increase wasn't a case of "ballooning" costs. "I would say the proper scope was determined after they got going," he said.
Accenture spokesman Jim McAvoy told CBS News, "Accenture is delivering all of our work for CMS on-time and on-budget."
But Republicans on the House Energy and Commerce Oversight subcommittee, which held the hearing, expressed concern about the money spent on HealthCare.gov.
"The agency continues to ignore recommendations and continues to pump money into what may be a futile effort," said Rep. Michael Burgess, R-Texas, who added, "We have very little to show for our money."
Rep. Marsha Blackburn, R-Tenn., pointed to the fact that several undercover investigators were able to set up fake identities and get Obamacare subsidies recently, saying, "I don't understand why my colleagues across the aisle continue to defend this thing."
Democrats on the committee, though, complained that Republicans were focusing too much on past issues rather than figuring out how to improve the handling of HealthCare.gov in the future. They pointed to recent drops in the uninsured rate, calling the Affordable Care Act a "historic success."
"We have unequivocal proof that health care reform is a success," said Rep. Henry Waxman, D-Calif. "Let's go forward trying to make things better, not dwelling on what was wrong."
Slavitt told the committee that the CMS was improving its software systems and had taken steps to overcome management and planning problems in the organization.
But William Woods, a high-up official at the GAO who testified in front of the committee following Slavitt's remarks, said CMS needed to further examine the past cost increases of HealthCare.gov.
"Our bottom line assessment is simple yet sober," Woods said. "CMS began and undertook the development of the HealthCare.gov system without adequate planning."
Woods said there had been "inconsistent and sometimes absent oversight" at CMS, saying around 40 changes were made to contracts by people who were not supposed to have such authority. He added that even more than $840 million has likely been spent on the website, since that figure was calculated in March.
"Obviously the spending has continued," he said.
In the GAO report, the agency made several recommendations to improve the management of HealthCare.gov, calling for a formalization of guidelines for contract managers and steps to address cost overruns. Slavitt said he agreed with the recommendations.
Editor's note: This story was updated to more accurately characterize Accenture's contract to fix HealthCare.gov.
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Beginning in 2014, the health reform law imposes a new sales tax on health insurance that will increase the cost of health care coverage. The amount of the tax will be $8 billion in 2014, increasing to $14.3 billion in 2018, and increased based on premium trend thereafter. The Joint Committee on Taxation estimates that the health insurance tax will exceed $100 billion over the next ten years.
How will the tax impact you?
The Congressional Budget Office (CBO) has said that this tax will be “largely passed through to consumers in the form of higher premiums.” A 2011 analysis by Oliver Wyman estimates that this tax “will increase premiums in the insured market on average by 1.9% to 2.3% in 2014,” and by 2023 “will increase premiums 2.8% to 3.7%.”
An updated report by Oliver Wyman, “Annual Tax on Insurers Allocated by State,” estimates the impact this tax will have on individual market consumers, employers, and Medicare Advantage beneficiaries in all 50 states, as well as the impact on state Medicaid managed care programs. Using this data, AHIP has developed infographics for each of the 50 states and Washington, DC, detailing the effect of the tax.