In a letter to the lieutenant governor of the U.S. Virgin Islands, Marilyn Tavenner, the administrator of the Centers for Medicare and Medicaid Services, informed him that the Virgin Islands, and other U.S. territories, would be exempt from the bulk of Obamacare. The announcement comes after years of complaints about the territories, who were being forced to comply with Obamacare while residents were not mandated to enroll and the territories were exempt from receiving federal subsidies. As Tavenner explained (PDF):
Currently, the Department uses the existing Public Health Service Act (PHS Act) definition of "state" for new PHS Act requirements and funding opportunities included in title I of the Affordable Care Act. Under this definition, the new market reforms in the PHS Act apply to the territories. We have been informed by representatives of the territories that this interpretation is undermining the stability of the territories' health insurance markets.
After a careful review of this situation and the relevant statutory language, HHS has determined that the new provisions of the PHS Act enacted in title I are appropriately governed by the definition of "state" set forth in that title, and therefore that these new provisions do not apply to the territories. This means that the following Affordable Care Act requirements will not apply to individual or group health insurance issuers in the U.S. territories:1 guaranteed availability (PHS Act section 2702), community rating (PHS Act section 2701), single risk pool (Affordable Care Act section 1312(c)), rate review (PHS Act section 2794), medical loss ratio (PHS Act section 2718), and essential health benefits (PHS Act section 2707). Specifically, under this interpretation, the definition of "state" set forth in the PHS Act will apply only to PHS Act requirements in place prior to the enactment of the Affordable Care Act, or subsequently enacted in legislation that does not include a separate definition of"state" (as the Affordable Care Act does).
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