The government's move to delay for some people a requirement to buy medical insurance raised new doubts about the already chaotic rollout of President Barack Obama's signature healthcare law, just days before an enrollment deadline.
In another technical setback on Friday for the main website for enrollment, HealthCare.gov, U.S. officials said it would be down for a few hours to repair an error that occurred overnight.
The Obama administration said late on Thursday that people who have had their insurance plans canceled because of new standards under health policy reforms may be able to claim a "hardship exemption" to the requirement that Americans have coverage by March 31, or face a penalty.
While several million people have received policy cancellations, U.S. officials estimate that fewer than 500,000 would be affected by this delay in the so-called individual mandate. The mandate is a core part of the 2010 Affordable Care Act, commonly called Obamacare, that aims to provide coverage to millions of uninsured Americans.
Republicans, who have opposed the health law all along as an unwarranted expansion of the federal government, quickly seized on the announcement as the latest sign that it is unworkable.
"It is the beginning of the end of the individual mandate," said Republican Senator Lindsey Graham.
The announcement was made shortly before the government's Dec. 23 deadline to sign up for insurance plans with coverage that starts on Jan. 1. U.S. officials are eager to get as many people to sign up as possible, especially after the disastrous Oct. 1 launch of HealthCare.gov.
Insurance industry trade group, America's Health Insurance Plans, criticized the change that could divert more consumers away from the new plans offered under Obamacare.
"This latest rule change could cause significant instability in the marketplace and lead to further confusion and disruption for consumers," AHIP President and CEO Karen Ignagni said in a statement.
An expected surge of enrollees could also put new stresses on the website. The Centers for Medicare & Medicaid Services (CMS), which oversees the website, said it would use its "queueing system" for a few hours on Friday. The outage occurred during a critical time for people seeking to sign up before Monday's deadline.
"This system is in place while the tech team works on fixing an error that happened during routine maintenance last night," CMS said in a statement.
The administration especially needs a large number of healthy, young Americans to sign up, to offset the expense of insuring sicker consumers. Thursday's announcement also raises fairness questions, as it gives a subset of Americans relief from the requirement to buy insurance.
Republican Senator John McCain of Arizona on Friday blasted the move as "another sign of the disintegration of Obamacare."
Senator Sherrod Brown, a Democrat from Ohio, said he worried about the move's impact on youth enrollment.
"I am very concerned about - I don't know for sure, but I am concerned about what happens to the universal pool of attracting people of all ages and various kinds of health status. I don't know where that plays in," he said outside the Senate on Friday.
The head of the lobby group for insurance companies late on Thursday raised concerns that insurers selling plans through the online marketplaces would struggle with this latest change to the rollout of the law.
In the law, there are 14 categories of "hardships" that can be used to get an exemption from the mandate to buy insurance, such as a recent eviction or bankruptcy.
But this is the first exemption prompted by the administration's botched rollout of the law after months of insistence that there would be no delays in implementing the individual mandate.
The rocky rollout of Obama's signature policy achievement has been embarrassing and politically damaging, helping push Obama's approval ratings to the lowest point of his presidency.
Part of the backlash came when millions of people received policy cancellation notices, forcing Obama to apologize for a promise he made that people who liked their insurance policies could keep them under the Obamacare reforms.
White House healthcare aide David Simas said on MSNBC on Friday that the policy change offered "more choice for a narrow and shrinking universe of people who we've been trying to accommodate for the past month."
The change announced late Thursday was suggested by a group of Democratic senators, some of whom face difficult reelection campaigns in 2014. Health and Human Services Secretary Kathleen Sebelius said in a letter to the senators that those people who receive the exemption will have the option to buy "catastrophic" insurance plans - cheaper insurance with a minimal coverage level that, under the law, is normally available only to people under the age of 30.