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Newly revealed Obamacare delay draws fire

President Obama discusses the Affordable Care Act in June in San Jose, Calif.
Jewel Samad | AFP | Getty Images
President Obama discusses the Affordable Care Act in June in San Jose, Calif.

Obamacare might not be a "train wreck," but the wheels sure do keep coming off of it.

Yet another delay in a key part of the Affordable Care Act gave critics more ammunition and raised further questions about the Obama administration's authority to delay implementing sections of the law without congressional approval.

The delay—which came to light Tuesday and relates to limits on out-of-pocket medical costs—also inflamed a leading patients' rights organization that originally backed Obama's efforts to reform health insurance. The controversy comes less than 50 days before new ACA state health exchanges begin signing up uninsured individuals on Oct. 1.

"This is very cynical and shameless what the administration is doing here," Sen. Mike Lee, R-Utah, told CNBC.com as he renewed calls for Congress to defund Obamacare. "To amend the statute you're supposed to be required to get legislation, and they didn't do that."

Lee noted that the out-of-pocket limit delay—which will affect unknown numbers of people—is drawing attention after two other major Obamacare delays.

"There really is this pattern now of executive branch fiddling, statutorily, with the law," said Avik Roy, a senior fellow with the Manhattan Institute. "I don't know if they have the legal authority, and I doubt they do."

Last month, the Obama administration announced that it was delaying by one year the ACA mandate that large employers offer affordable insurance to their workers in 2014. It also revealed a one-year delay in procedures to verify incomes of people claiming eligibility for government subsidies to buy insurance on the state health exchanges.

(Read more: Obamacare subsidy "cliff")

On Tuesday, The New York Times published a large story highlighting another delay until 2015. The ACA, as passed by Congress, capped total out-of-pocket medical costs at $6,350 for insured individuals, and $12,700 for families. But the administration is now delaying those caps for group health plans that use multiple service providers, such as plans having one administrator for major medical coverage and another for prescription drug benefits.

The delay means that in 2014, plans that have that segregated arrangement will automatically have those maximum amounts only on out-of-pocket major medical costs.

And if, for instance, a group benefit plan already has a cap in place for separately administered out-of-pocket drug benefits, then that plan's new maximum in 2014 for those benefits must not be in excess of $6,350 for individuals, and double that for families. That means affected people would be on the hook for potentially twice the amount of money they would otherwise have been next year because of the delay.

But if there is not already a cap in place for such separate benefits, then there will be no limit on the out-pocket costs for those benefits through 2014, because of the delay. That means that people needing, for example, cancer medications could find themselves facing tens of thousands of dollars in extra costs.

The delay was revealed in a list of 137 "frequently asked questions (FAQ)" posted by the Labor Department in February. There had been some earlier stories about the delay, including by Kaiser Health News, but even some close observers of the ACA rollout were unaware of the delay until the Times story.

The Times, quoting an unidentified senior administration official, said the delay would give insurance plan sponsors and carriers time to coordinate their separate computer systems that track benefits and out-of-pocket costs.

But it will also force a number of people, particularly those seriously ill, to pay a lot more money.

"This has consumer impact," said Bryce Williams, managing director of exchange solutions for professional services company Towers Watson. "You have a key consumer protection that is going away."

For consumers, he said, this delay is the most significant of all the delays.

(Read more: Red vs. Blue in Obamacare exchange duel)

Marc Boutin, chief operating officer of the National Health Council of 107 patient advocacy organizations, said that when his group first heard about the delay last April "we thought it was some kind of mistake."

"It was ... surprising, and it contradicts the statute, and it didn't go through the regulatory process," Boutin said.

Questions about the delay's legality aside, "the impact for people with chronic, and life-threatening issues could be life and death," Boutin said. "Out-of-pocket costs are designed to compel people not to seek health care, which for the people I represent is the kind of care they need to live."

Boutin blasted the administration's rationale for the delay, saying that insurance plans and administrators "had three years to get ready for this," and to resolve the issue of their computer systems communicating about the out-of-pocket cost data.

The council has asked the Obama administration to tweak the delay by setting maximums for out-of-pocket expenses for the separate benefit categories so they would total the original maximum levels when added together. For example, setting a $3,175 maximum for major medical costs for individuals, and another $3,175 maximum for prescription drug costs.

The administration has failed to respond, Boutin said.

(Read more: Obamacare may cut your work schedule)

Senator Lee said the delay appears to be designed to help hold down insurance premiums until 2015—after the 2014 House and Senate elections—and he claimed that was an impetus for the moratorium.

"The president realizes the political consequences of allowing the insurance premiums of voters to skyrocket over the next 12 months and is choosing to lay the burden on the most chronically ill and most vulnerable Americans," Lee said. "It is a desperate and shameful political move."

Thomas Scully, who served as President George W. Bush's first administrator for the Centers of Medicare and Medicaid Services, said the delay "was a smart move, politically," for the Obama administration, "just like delaying the employer mandate was smart politically."

"If they didn't do it, they were going to see a bigger jump in premiums," Scully said. "If I were them, I'd leave it off forever."

(Read more: Major Obamacare exchanges deal)

A spokeswoman for the federal Health and Human Services Department declined to comment on the political implications of the delay, or on questions of the Obama administration's authority to alter aspects of the Affordable Care Act including out-of-pocket maximums.

However, the spokeswoman, Erin Shields Britt, noted that before the ACA, "there's never been out-of-pocket limits before," and that even with the one-year delay there now will be such caps, which will come down to the originally defined limits by 2015.

And she pointed out other ACA's reforms and consumer protections that will got into effect in 2014.

"For the first time, new historic consumer protections under the Affordable Care Act will protect consumers from the worst insurance company abuses, by banning discrimination based on a pre-existing health conditions, ending lifetime and annual limits on what an insurance company will cover, and capping out-of-pocket spending to protect Americans and their families," she said.

Sarah Lueck, a senior policy analyst at the Center for Budget and Policy Priorities, agreed that even with the delay "to the extent that someone didn't have [a cap on out-of-pocket medical costs] they will get one now."

And, Lueck noted, the delay does not apply to the state health insurance exchange plans, but only to group health plans offered by employers.

"In the individual markets where you have a surge of [uninsured] people enrolling, you're still going to have this cap," Lueck said.

By CNBC's Dan Mangan. Follow him on Twitter @_DanMangan.

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