Five U.S. territories become Obamacare-free, with a catch
The mass media downplayed last week’s Obama administration ruling that five U.S. territories don’t have to carry out most of the Affordable Care Act. But two court rulings this week about Obamacare could focus more attention on the Department of Health and Human Services’ decision.
In case you missed it, the HHS said on July 17 that Puerto Rico, the U.S. Virgin Islands, American Samoa, Guam and the Northern Mariana Islands aren’t considered “states” for most ACA insurance purposes, and people who buy and sell in the health insurance marketplace there aren’t subject to most Obamacare mandates. The new ruling effectively overturned a 2013 HHS ruling that said the opposite – that the five territories were “states” under the ACA’s provisions.
“After a careful review of this situation and the relevant statutory language, HHS has determined that the new provisions … are appropriately governed by the definition of ‘state,’ ” said the HHS said in a statement. “[T]hese new provisions do not apply to individual or group health insurance issuers in the U.S. territories.”
The two unrelated federal court rulings this Tuesday disagreed on another part of the ACA that uses the word “State.”
Obamacare opponents believe a strict reading of the ACA says that only people in state-run health-care exchanges can qualify for the Obamacare tax breaks. That would exclude people in 34 states from getting Obamacare tax subsidies to pay for health insurance.
The Obama administration argues that an Internal Revenue Service ruling makes it clear that the tax credits apply to states that have federally run insurance exchanges, and any misunderstanding about the word “State” was a drafting error in the law and not the true intent of Congress.
While the argument over what is a “State” for Obamacare purposes within the 50 United States seems headed toward the Supreme Court for its next term, the 4.5 million people in the five U.S. territories face a different situation.
The ACA was written by Congress to let the HHS set the Obamacare rules for the five U.S. territories. In turn, the HHS re-interpreted the Public Health Service Act to say that the five U.S. territories, which aren’t states to begin with, shouldn’t be treated like states.
The previous HHS ruling required insurance companies offering policies in Puerto Rico, the U.S. Virgin Islands, American Samoa, Guam and the Northern Mariana Islands to accept all applicants and offer all mandated benefits to the applicants, regardless of earlier health problems. But the HHS didn’t require residents to buy health insurance or pay a penalty.
The imbalance between new patients seeking policies without more money flowing to insurers to offset expenses gave insurance companies a powerful reason to leave those five marketplaces.
An administration official from the Centers for Medicare and Medicaid Services acknowledged as much last week, telling the Washington Post that the insurers in the five U.S. territories couldn’t handle the influx of sicker patients.
“We are providing additional flexibility to the territories in order to implement the law in a way that recognizes their unique situations,” the spokesman said.
So for now, some Obamacare regulations stay in the five territories, including the ban on lifetime and annual limits, and the contraception coverage requirement.
But the decision will undoubtedly give more fodder to the ACA’s critics, who believe the administration isn’t consistent with what it defines as a state for insurance purposes. It also could fuel criticism that the HHS’s efforts aren’t helping uninsured or under-insured in the five territories.
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