The Corner

HHS Exempts U.S. Territories from Most of Obamacare, After Refusing to Do So for Months

The Obama administration has announced that U.S. territories, already exempt from a number of the Affordable Care Act’s rules, will now be exempt from most of them.

On Wednesday, a Department of Health and Human Services letter explained that a number of Obamacare’s regulations of state insurance markets, such as community rating, will not apply to the territories because they are not considered “states.”

“We have been informed by representatives of the territories that this interpretation is undermining the stability of the territories’ health insurance markets,” the letter stated.

The territories, which include Guam and the U.S. Virgin Islands, already didn’t have an individual mandate or health-insurance subsidies. Those two provisions, designed to help bring in healthy and young customers into the insurance market, haven’t worked especially well in the states, but their total absence in the territories created especially large problems.

Without subsidies and the mandate to encourage everyone to sign up, the territories saw a large proportion of enrollments from old and sick people, according to The Wire.

“HHS and the government itself describe health care reform as a three-legged stool where you have the mandate, the subsidies and the market reforms,” the director of the Virgin Islands’ division of banking and insurance, John McDonald, told the Washington Post in December. ”Well, what they’ve basically done is left us with a one-legged stool.”

The HHS had refused to allow an exemption for the territories, stating that it did not have the authority to do so.

“HHS is not authorized to choose which provisions . . . might apply to the territories,” HHS official Gary Cohen wrote last year in a letter to territorial governors.

Now, a spokesman for the Centers for Medicare and Medicaid services told the Post, the agency has changed its mind after recognizing recognized the special circumstances of the territories.

“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.

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