WASHINGTON — While the Trump administration waits on congressional Republicans to repeal Obamacare, the White House is making moves to both weaken the law's individual mandate and tighten rules in the hopes of stabilizing insurance marketplaces.
Under President Trump's recent executive order to reduce the burdens of the Affordable Care Act, the IRS is abandoning a policy to automatically reject tax filings that do not comply with the individual mandate, signaling that the Trump administration will be less strict on enforcing it.
At the same time the Department of Health and Human Services is tightening up exemptions that insurance companies have long decried as loopholes that allow people to game the system.
The combined effect is that the Trump administration is trying to fix the health system established by the Affordable Care Act, while also gradually undoing it.
Under the individual mandate, Americans are supposed to indicate on line 61 of their Form 1040 filing whether they have health insurance, an exemption from coverage, or made a shared responsibility payment. Tax returns leaving line 61 blank would be rejected during processing.
But now, the Trump administration has advised the IRS to reverse that policy. Tax forms that leave line 61 blank will no longer be automatically rejected, though the IRS still has the option to follow up with the individual filer.
This at least weakens the individual mandate and may ultimately undo it entirely, said American Action Forum president Douglas Holtz-Eakin.
“This is the Trump administration saying enforcing the individual mandate is less of a priority," he said. “This is the way you can not repeal the individual mandate (which would require legislation), but effectively have it be a non-factor.”
But for now, the individual mandate is still the law of the land. Ezekiel Emanuel, who advised Obama during the creation of the ACA, disagreed with Holtz-Eakin, arguing that until that changes the IRS policy won't have much more than symbolic value.
“It’s not earth-shattering. I don’t think it’s going to make a substantial difference," he said.
In fact, the automatic rejection of incomplete forms was only put in place this year, the IRS said in a statement. Despite the change in enforcement, the agency says that taxpayers are still required to follow the Obamacare mandate.
HHS to crack down on Obamacare loopholes
On the Health and Human Services side, the administration is making a series of changes to be more strict on when and how people can enroll for health care.
Next year's open enrollment period will be cut in half, from three months to six weeks. There will also be increased eligibility screening for those enrolling during "special enrollment" periods.
The administration will now allow insurance companies to require individuals to pay previous unpaid premiums in full before he or she can buy new insurance. The move comes in response to reports that people were exploiting a 90-day grace period built into the health care law. Because coverage resets at the end of the year, a person could essentially get 12 months of coverage for the cost of nine by stopping premium payments before the end of the year.
The insurance industry has long decried these exemptions as loopholes that allow people to sign up for insurance only when they need it, then drop out of paying premiums once they do not.
Emanuel agrees that Obamacare architects may have tried so hard to be accommodating that they inadvertently opened up ways for people to game the system.
“Trying to be understanding to everyone does create big risks of free riding," he said.
What comes next?
The immediate question is what impact these rule changes will have on the individual marketplaces at a time when the future of health care is entirely unclear.
Larry Levitt of the Kaiser Family Foundation says the IRS and HHS rules are sending mixed messages to the insurance industry.
"On the one hand, the proposed regulations include a lot of items on the industry's wish list," he said.
"On the other hand, the weakening of planned enforcement of the individual mandate suggests the mandate will not be rigorously administered, which is an invitation to healthy people not to sign up."
On the congressional side, there is little clarity on future direction. On Wednesday the right-wing House Freedom Caucus unified behind a comprehensive ACA repeal plan proposed by Sen. Rand Paul.
But that plan includes a full repeal of Medicaid expansion. There are open doubts that even the 51 Republican senators needed to pass a budget reconciliation bill to repeal Obamacare would support such a plan, let alone any Democrats needed for passing replacement legislation.
"We need 51 votes on this and if you're not going to treat your states appropriately, you're probably not going to get your 51 votes," said Republican Sen. Mike Rounds.