The Obama administration’s decision to delay penalties associated with a lack of health insurance coverage could presage further delays due to the federal government’s error-filled enrollment website, according to health policy experts.

A U.S. Department of Health and Human Services (HHS) official told some reporters Wednesday night that the federal government planned to delay by six weeks enforcement of the tax penalties that the Affordable Care Act (ACA) established for most Americans who fail to obtain qualifying coverage after Jan. 1. The HHS official portrayed the change as a clarification and not a delay.

The law allows a three month grace period to April 1, but to have qualifying coverage activated by then, enrollees would have had to purchase coverage by Feb. 15. The coming delay will allow uncovered people to wait until March 31 to purchase qualifying coverage without facing penalties. 

Technical Difficulties Largely to Blame

The six-month open enrollment period for coverage in plans offered through the new state and federal-run health insurance marketplaces, also known as exchanges, ends March 31. But the federal and many state marketplace websites have had minimal functionality, which has resulted in far fewer enrollments than projected.

HHS officials quoted in media reports stated the delay was merely intended to address the difference in enrollment and penalty timeframes and was not related to problems with the enrollment websites. But that was not how healthcare experts viewed the penalty delay.

“The extension of the enrollment penalty deadline by HHS is an acknowledgement that additional time is needed for potential enrollees who have been impacted by the marketplace enrollment problems,” said Rick Gundling, vice president, healthcare financial practices for HFMA. “I would expect additional extensions for time in various rules as needed to address solutions to enrollment issues.”

Whether the administration undertakes further delays in the law will likely depend on whether enrollment problems in the marketplace websites can be resolved over the next six weeks, said Gail Wilkensky, a senior fellow at Project HOPE and the former administrator of Medicare and Medicaid.

“It is recognizing the more-than-obvious incredible snafus with the website,” she said in an interview.

The only possible further delay, according to Tim Jost, a Washington and Lee law professor and an ACA expert, would be a potential extension of the end of the open enrollment period past March 31. Any decision on that could wait until March 1, when the extent of enrollment is more clear.

Federal officials have projected that 7 million people will enroll in private insurance coverage through the marketplaces for 2014 coverage. So far, federal officials have declined to disclose enrollments, and the limited enrollment data released by state marketplaces indicate far fewer enrollments than predicted. 

Most enrollments have occurred in Medicaid, which was separately expected to enroll 9 million new beneficiaries in 2014, according to the nonpartisan Congressional Budget Office.

Why the Penalty Was Delayed

Both Jost and Wilensky credited Wednesday’s delay to increasing political pressure from Congress. Several Democrats this week joined long-standing Republican calls for a one-year delay in the individual mandate. Sen. Joe Manchin (D-W.Va.) said in a television news interview Wednesday night that he was planning to introduce a bill to delay the mandate due to the website problems.

“People are making a lot of noise about delaying the mandate and this aims to quiet that down,” Jost said in an interview with HFMA.

Although the administration has already missed the 2012 start of the individual mandate required in the law, any further delay could seriously impact insurers offering plans through the marketplaces, Wilensky said.

“Plans were offered based on that timeframe,” Wilensky said.

Further delays would increase the likelihood of inaction by the 2.7 million healthy young people who were estimated to sign up for coverage in 2014 and ensure solvency of the marketplace plans, according to Wilensky.  

The penalty delay followed the administration’s July decision to delay for one year the requirement that businesses with 50 or more workers provide health qualifying insurance or pay a fine. But the administration has resisted calls to delay the individual mandate because that is seen as a more central element of the law.

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare.

Publication Date: Thursday, October 24, 2013