Officials say the estimate represents their best approximation after gathering figures. | REUTERS White House broadens Obamacare exemptions

Millions of Americans who had their health plans cancelled will be exempt from the Obamacare individual mandate, the administration said Thursday — a surprise move that comes just before Monday’s deadline to sign up for coverage starting Jan. 1.

The administration also said people who had their plans cancelled could get a scaled-back catastrophic plan, which has more limited benefits than those included in other Obamacare health plans.


The move prompted sharp criticism from Republicans and concern from the insurance industry that another last-minute change would disrupt coverage and lead to tumult in the new marketplaces.

( Also on POLITICO: For Obamacare boosters, all memes are good memes)

“This latest rule change could cause significant instability in the marketplace and lead to further confusion and disruption for consumers,” said Karen Ignagni, president of America’s Health Insurance Plans, an industry trade group.

Republicans who have fought the individual mandate as one of the most hated aspects of the sweeping health law said the change was one more sign of a failed policy.

“The administration is recognizing the grim reality that more Americans have lost health insurance than gained it under Obamacare,” Sen. Marco Rubio (R-Fla.) said Thursday evening. “Holding a fire sale of cheap insurance is not a responsible fix for a broken program. This is a slap in the face to the thousands of Americans who have already purchased expensive insurance through the Obamacare exchanges.”

( Understanding Obamacare: POLITICO’s guide to the ACA)

President Barack Obama had often said that people who liked their health plans could keep them under his health law and the wave of millions of cancellations was politically damaging, particularlyas the HealthCare.gov debacle made it so hard for people to shop for replacement coverage. Obama, whose poll numbers have dropped sharply, was forced to concede last month that he was wrong to have made that pledge.

The administration said fewer than a half-million people whose plans had been cancelled had not yet found new coverage. But the new rules outlined Thursday night will allow people to get a “hardship exemption” if their new alternatives are too expensive.

( Also on POLITICO: Michelle Obama steps into health care spotlight)

Joanne Peters, a spokeswoman for the Department of Health and Human Services, said, “This is a common sense clarification of the law. For the limited number of consumers whose plans have been canceled and are seeking coverage, this is one more option.” Administration officials noted that some of the people who lost plans were able to get subsidized ones in the new exchanges.

The catastrophic plan, which was always a part of the Affordable Care Act, is an option for people under 30 and for those who qualify for specific exemptions, such as affordability. Under the new policy, people would have to provide proof of a canceled policy to qualify for the exemption.

“These consumers should qualify for this temporary hardship exemption and I can assure you that the exemption will be available to them,” HHS Secretary Kathleen Sebelius wrote in a letter to six Senate Democrats who requested a policy change. “As a result, in addition to their existing options these individuals will also be able to buy a catastrophic plan to smooth their transition to coverage through the Marketplace.”

( PHOTOS: 25 unforgettable Obamacare quotes)

The administration does not expect many people will take up the new option, but wants to ensure that catastrophic coverage is available to those who had plans canceled. But making catastrophic health plans more broadly available also poses problems for insurers. It could disrupt the insurance pools, since insurers and actuaries had assumed that people shifting from the old individual market would go into the new bronze, silver or gold plans on the Obamacare exchanges. And allowing people to opt out completely could further depress enrollment, already below target because of all the website problems.

Follow @politico

The estimate that under a half-million now lack coverage is much smaller than the projections that millions of people who lost coverage on the individual market could be uninsured on Jan. 1. Some reports had said as many as 14 million people could be affected by the cancellations, but senior administration officials said the number was never that large. Some plans had been automatically renewed by insurers or extended under a grandfather provision of the law. Other plans were canceled because they didn’t meet Obamacare coverage requirements.

The officials said the half-million estimate represents their best approximation after gathering figures from insurance companies and state officials.

Under pressure from Democrats and Republicans, Obama had asked insurers to voluntarily extend the policies for another year. Not all the state insurance commissioners agreed, and neither did all the health plans.

The administration has tried to reach out to people with canceled policies to ensure they can have coverage if they want it in 2014. Insurers have also aggressively reached out to their customers with canceled policies.

Earlier Thursday, six Democrats asked the administration to broaden the options for people with canceled plans..

“We believe that an individual whose 2013 plan was canceled and considers their new premium unaffordable should qualify for a temporary ‘hardship exemption’ and thus, be able to purchase a catastrophic plan,” the lawmakers wrote in a letter to Sebelius.

The letter was signed by Democratic Sens. Mark Warner, Jeanne Shaheen and Mary Landrieu, who are up for reelection in 2014. It was also signed by Sens. Tim Kaine, Heidi Heitkamp and Angus King, a Maine Independent who caucuses with Democrats.

Republicans have been arguing that more people have lost coverage than gained it by Jan. 1 because of the cancellations. A spokesman for Senate Minority Leader Mitch McConnell (R-Ky.) on Thursday highlighted the numbers: About 365,000 people selected plans through the federal and state marketplaces through November, and as many as 500,000 with canceled plans have yet to purchase new ones.

But administration officials dismissed the argument, pointing to the sharp uptick in enrollments this month once the website was repaired.

Administration officials disclosed the estimate on the canceled policies during a briefing for reporters on their preparations ahead of the Dec. 23 deadline to sign up for insurance under the Affordable Care Act and the Jan. 1 start of coverage.

The administration has added 800 new agents to its Obamacare call centers to accommodate a rush of enrollments into next week, the officials said. There are about 12,000 agents staffing the centers.

Obama heads to Hawaii on Friday for a two-week vacation but told his staff that he expects frequent updates.

Given the time difference with Hawaii, officials said it did not make sense to have any staff focused exclusively on Obamacare travel with him because they were needed in Washington. Only Deputy National Security adviser Ben Rhodes and deputy press secretaries Josh Earnest and Eric Schultz will accompany the president on his vacation.

But, one official added, there will be no federal holiday Jan. 1 for people working on Obamacare.