Looking for a place where the Affordable Care Act doesn’t apply? Try moving to the U.S. territories, where the Obama administration just provided a pretty big waiver from the law’s major coverage provisions.
The Affordable Care Act’s design dealt a problem to the territories. It required insurers there to comply with the law’s major market reforms — guaranteed coverage, mandated benefits, limits on profits — without requiring residents to get coverage or providing subsidies to help afford coverage. The territories — Puerto Rico, the U.S. Virgin Islands, American Samoa, Guam and the Northern Mariana Islands — have been warning for years that would destroy their insurance markets.
The individual mandate and the subsidies are the major ways the ACA tries to bring healthy people into the individual insurance market to balance out sick patients who can no longer be denied coverage.
That was until Wednesday, when the Obama administration told the territories that the coverage requirements actually don’t apply to them. The exemption was posted on a Health and Human Services website Thursday.
It’s an apparent reversal from last July, when an HHS official told the territories that there was nothing the agency could do to help them out.
What sparked the latest change? The definition of “state” in the Public Health Service Act indicates that the ACA market rules don’t apply to the territories, HHS wrote. The department said group health plans in the territories must still comply with other requirements in the law, such as the ban on lifetime and annual limits, a ban on rescission and a coverage of preventive benefits (which includes contraception coverage).
A spokesman for the Centers for Medicare and Medicaid Services, which is overseeing ACA implementation, said the agency recognized that the territories’ insurers saw a greater share of sicker patients as a result of the way the law had been implemented there.
“The Department is committed to working with states and the U.S. territories in order to implement the health care law in a way that maximizes coverage options for consumers,” the spokesman said. “As such, we are providing additional flexibility to the territories in order to implement the law in a way that recognizes their unique situations.”