Tucked inside nearly 11,000 pages of the Affordable Care Act is a little-known provision that doles out three months of free health care to individuals who choose to default on their premiums.
People who receive the federal subsidy to be part of Obamacare will be allowed to incur a three-month “grace period” if they can’t pay their premiums and then simply cancel their policies, stiffing the doctors and hospitals.
Their only repercussion is that they have to wait until the following year’s open enrollment if they want coverage on the exchange.
“It will help break the system,” said Rep. Louie Gohmert, R-Texas, one of a core group of Republicans who oppose Obamacare. “This is a huge piece of evidence to show this can’t work, you will break the system and bankrupt people involved.
“The hospitals, doctors and insurance companies will be left holding the bag. There will be disagreements over who will pay for what. Lawyers will get involved because we are talking about a lot of money,” he said.
Under Section 156.270 of the Affordable Care Act, the insured needs to pay a premium for just one month before qualifying for the three-month grace period. The insurance company must pay the claims during the first month of the grace period; during the second and third month doctors and hospitals are left to collect unpaid bills.
This loophole wasn’t lost on some unnamed individuals who queried the Department of Health and Human Services during an open comment period for the new law in 2011.
While officials at HHS did not respond to requests for comment on this story, they did offer a glimpse into their thinking in a March 27, 2012, report contained in the Federal Register.
“HHS will continue to explore options for incentivizing appropriate use of the grace period,” the register said. “HHS will monitor this issue moving forward and will continue to work on the development of policies to prevent misuse of the grace period.”
Experts say the federal government has given people the green light to commit fraud.
“In a sense, it legalizes fraud,” said Wesley J. Smith, a senior fellow at the Discovery Institute of Human Exceptionalism and a frequent critic of the Affordable Care Act. “It legalizes putting your burdens on the insurance companies’ shoulders and never paying your premiums. The government wants people to be irresponsible and apparently they want the whole system to descend into chaos.”
In Massachusetts, where a variation of Obamacare already exists, the problem already has emerged, said Devon Herrick, senior fellow with the National Center for Policy Analysis.
“People are signing up and getting care and bailing out,” Herrick said. “I was talking to an insurance agent a few years ago (in Massachusetts). She said once a week she would get a call from a college girl who discovers she’s pregnant and wants health insurance. That’s an example of a condition that you can schedule.”
Some medical professionals are bracing themselves for the worst.
The Texas Medical Association is educating its members about the loophole and receiving feedback from worried doctors. Many in that state operate on a shoestring budget, sometimes taking out loans to stay in business.