Timothy Jost, a health policy expert at Washington and Lee University School of Law, and a supporter of the Patient Protection and Affordable Care Act, agreed that the move is largely symbolic. “It's all political,” he said. “The whole cancellation issue has been a goldmine for the Republicans and they're mining it for all it's worth.”
Jost further points out that the guidelines for receiving a hardship exemption (PDF) are extremely broad. For instance, individuals who have recently experienced domestic violence or the death of a close family member are eligible for exemptions.
“If someone wants a hardship exemption, there's a lot of categories out there they might fit into,” Jost said. “I think the problem is that they've defined hardship so broadly already that they've already undermined the individual mandate.”
Sebelius also announced that individuals with canceled policies will be allowed to purchase catastrophic coverage. Previously, only individuals under the age of 30 could avoid incurring a financial penalty after March 31 by purchasing such plans. However, there are no federal subsidies available for those buying catastrophic coverage.
The White House has been trying to quiet a backlash that erupted after tens of thousands of individuals received plan cancellation notices in recent months, contradicting President Barack Obama's oft-stated claim that nobody would lose coverage that they wanted as a result of the Affordable Care Act. In response, the administration announced last month that it would allow insurance companies to renew plans for 2014 that don't meet the mandates of the federal healthcare reform law.
Whether the new guidance represents a change in policy, the insurance industry reacted warily to the latest backpedaling from HHS. “This latest rule change could cause significant instability in the marketplace and lead to further confusion and disruption for consumers,” Karen Ignagni, president and CEO of America's Health Insurance Plans, said in a statement.
Despite the House being in recess until next year, Majority Leader Eric Cantor pointed to the development as evidence that the entire law, including the individual mandate, should be delayed for a year.
"Our entire healthcare system can't be fundamentally changed at any given time subject to the random impulses of President Obama,” Cantor said in a statement. “How can anyone make healthcare decisions today knowing that the law may be unilaterally changed again tomorrow?”
Follow Paul Demko on Twitter: @MHpdemko