Health Law Waivers Draw Kudos, and Criticism
By ROBERT PEAR
WASHINGTON — Obama administration officials say they were expecting praise from critics of the new health care law when they offered to exempt selected employers and labor unions from a requirement to provide at least $750,000 in coverage to each person in their health insurance plans this year.
Instead, Republicans have seized on the waivers as just more evidence that the law is fundamentally flawed because, they say, it requires so many exceptions. To date, for example, the administration has relaxed the $750,000 standard for more than 1,000 health plans covering 2.6 million people.
The waivers have become a flash point as supporters and opponents try to shape public perceptions of the law, the Affordable Care Act, signed by President Obama last March 23.
Administration officials, labor unions and consumer advocates plan to celebrate the first anniversary with a week of events highlighting benefits of the law to consumers. But Senator Michael B. Enzi of Wyoming, the senior Republican on the Senate health committee, asked, “If the law is so good, why are so many waivers needed?”
Waivers are usually seen as a way to deal with exceptional circumstances in which the enforcement of a law or policy might cause hardship. But with the new health care law, exceptions like these have become increasingly common. They provide wiggle room in a law originally thought to be strict and demanding.
Maine has just won a three-year reprieve from a provision of the law stipulating that insurers selling coverage to individuals and families must spend at least 80 percent of premium revenues on medical care and efforts to improve it. The White House had described this as one of the law’s most beneficial provisions, guaranteeing that consumers would get “more value for your dollars.”
The Obama administration lowered the requirement to 65 percent for Maine, after finding “a reasonable likelihood” that the tougher standard would drive one big carrier out of the market for individuals, leaving thousands without insurance.
Five other states — Florida, Georgia, Kentucky, Nevada and New Hampshire — have requested similar waivers, and at least a dozen other states are considering whether to apply.
President Obama recently embraced legislation that would let states opt out of the law’s most contentious provisions, including a requirement for most Americans to carry insurance, if the states come up with alternatives that cover at least as many people.
And Representative Mike Rogers, Republican of Michigan, has introduced a bill that would allow people to seek exemptions from major provisions of the law if they could show they would be harmed.
Under the law and rules issued by the administration, health plans this year must generally provide at least $750,000 in annual coverage for essential benefits like hospital care, doctors’ services and prescription drugs. The government may grant a one-year exemption from the requirement if it is shown that compliance would cause a significant increase in premiums or a significant decrease in access to benefits.
Such waivers have gone to entities as diverse as the Waffle House and Ruby Tuesday, health plans run by Aetna and Cigna, and labor unions representing Teamsters, electrical workers, plumbers, carpenters and food and commercial workers.
Administration officials said the waivers showed a pragmatic, flexible approach to carrying out the law. Without the waivers, said Kathleen Sebelius, the secretary of health and human services, many employers would have increased premiums, and some would have dropped coverage altogether.
Edmund F. Haislmaier, a health policy expert at the conservative Heritage Foundation, said the waivers “result in unequal application of the law and create a temptation to engage in political favoritism.”
Republicans like Representative Darrell Issa of California said that in granting waivers, the administration had favored political allies, including labor unions.
Tom Leibfried, a lobbyist for the A.F.L.-C.I.O., said: “This is just union bashing. The numbers do not show a pro-union bias.”
Mr. Leibfried said some union health plans had a legitimate need for waivers because they had annual coverage limits lower than $750,000. If they had to increase coverage to that level, he said, they would incur significant new costs. But, Mr. Leibfried said, the main source of financing for such health plans — employer contributions — will not immediately increase because they are set by collective bargaining agreements, which are typically in effect for several years.
Steven B. Larsen, director of the federal Center for Consumer Information and Insurance Oversight, which carries out many of the health law’s provisions, said the waivers provided a “bridge to 2014,” when more affordable insurance options should be available. He denied that unions had received “special treatment.” Indeed, he said, the center has granted waivers to 94 percent of all applicants.
“That strikes me as a very high percentage,” said Senator Charles E. Grassley, Republican of Iowa. He suggested that the waivers were meant to limit political damage — “the amount of griping and complaining” about the law — before the 2012 elections.
The need for waivers is likely to continue. Federal rules require health plans to provide at least $1.25 million in coverage next year and $2 million in 2013. After that, the law generally prohibits annual dollar limits on coverage of essential health benefits.
In issuing the rules, the administration estimated that 18 million people were in health plans with annual limits.
Consumers have indisputably benefited from some provisions of the law. But for Democrats, the political benefits have been less than they expected.
“A lot of Americans just don’t know about some of the benefits,” said Senator Max Baucus, Democrat of Montana, who helped write the law as chairman of the Finance Committee.
A poll conducted this month by the Kaiser Family Foundation found that 42 percent of Americans had favorable views of the law while 46 percent viewed it unfavorably. Public perceptions of the law were slightly more negative than when it was passed. People most likely to benefit from the law — the uninsured and low-income households — were more likely to say they had too little information to know how it would affect them.
Under one of the law’s more popular provisions, young adults can stay on their parents’ insurance policies to age 26. Insurers generally cannot charge co-payments for preventive services like mammograms and colonoscopies; cannot rescind coverage after a person becomes ill; and cannot deny coverage to children with pre-existing conditions.
Medicare beneficiaries who use large amounts of prescription drugs can get discounts on their medicines. And some small businesses can obtain tax credits to help them pay premiums.
The biggest changes, including the requirement for people to carry insurance, take effect in 2014, when each state is supposed to have an insurance exchange, or market, where consumers can compare policies and buy coverage.
Senator Harry Reid, the Nevada Democrat and majority leader, said the law had already produced “miracles in the lives of people all over America,” enabling them to obtain health care that would otherwise have been out of reach.
At the same time, the State of Nevada has asked the Obama administration to relax the provision requiring insurers to spend at least 80 percent of premium dollars on health care. Brett J. Barratt, the state’s insurance commissioner, said that several carriers were likely to withdraw from Nevada’s individual insurance market if the federal government did not grant such relief.
Instead, Republicans have seized on the waivers as just more evidence that the law is fundamentally flawed because, they say, it requires so many exceptions. To date, for example, the administration has relaxed the $750,000 standard for more than 1,000 health plans covering 2.6 million people.
The waivers have become a flash point as supporters and opponents try to shape public perceptions of the law, the Affordable Care Act, signed by President Obama last March 23.
Administration officials, labor unions and consumer advocates plan to celebrate the first anniversary with a week of events highlighting benefits of the law to consumers. But Senator Michael B. Enzi of Wyoming, the senior Republican on the Senate health committee, asked, “If the law is so good, why are so many waivers needed?”
Waivers are usually seen as a way to deal with exceptional circumstances in which the enforcement of a law or policy might cause hardship. But with the new health care law, exceptions like these have become increasingly common. They provide wiggle room in a law originally thought to be strict and demanding.
Maine has just won a three-year reprieve from a provision of the law stipulating that insurers selling coverage to individuals and families must spend at least 80 percent of premium revenues on medical care and efforts to improve it. The White House had described this as one of the law’s most beneficial provisions, guaranteeing that consumers would get “more value for your dollars.”
The Obama administration lowered the requirement to 65 percent for Maine, after finding “a reasonable likelihood” that the tougher standard would drive one big carrier out of the market for individuals, leaving thousands without insurance.
Five other states — Florida, Georgia, Kentucky, Nevada and New Hampshire — have requested similar waivers, and at least a dozen other states are considering whether to apply.
President Obama recently embraced legislation that would let states opt out of the law’s most contentious provisions, including a requirement for most Americans to carry insurance, if the states come up with alternatives that cover at least as many people.
And Representative Mike Rogers, Republican of Michigan, has introduced a bill that would allow people to seek exemptions from major provisions of the law if they could show they would be harmed.
Under the law and rules issued by the administration, health plans this year must generally provide at least $750,000 in annual coverage for essential benefits like hospital care, doctors’ services and prescription drugs. The government may grant a one-year exemption from the requirement if it is shown that compliance would cause a significant increase in premiums or a significant decrease in access to benefits.
Such waivers have gone to entities as diverse as the Waffle House and Ruby Tuesday, health plans run by Aetna and Cigna, and labor unions representing Teamsters, electrical workers, plumbers, carpenters and food and commercial workers.
Administration officials said the waivers showed a pragmatic, flexible approach to carrying out the law. Without the waivers, said Kathleen Sebelius, the secretary of health and human services, many employers would have increased premiums, and some would have dropped coverage altogether.
Edmund F. Haislmaier, a health policy expert at the conservative Heritage Foundation, said the waivers “result in unequal application of the law and create a temptation to engage in political favoritism.”
Republicans like Representative Darrell Issa of California said that in granting waivers, the administration had favored political allies, including labor unions.
Tom Leibfried, a lobbyist for the A.F.L.-C.I.O., said: “This is just union bashing. The numbers do not show a pro-union bias.”
Mr. Leibfried said some union health plans had a legitimate need for waivers because they had annual coverage limits lower than $750,000. If they had to increase coverage to that level, he said, they would incur significant new costs. But, Mr. Leibfried said, the main source of financing for such health plans — employer contributions — will not immediately increase because they are set by collective bargaining agreements, which are typically in effect for several years.
Steven B. Larsen, director of the federal Center for Consumer Information and Insurance Oversight, which carries out many of the health law’s provisions, said the waivers provided a “bridge to 2014,” when more affordable insurance options should be available. He denied that unions had received “special treatment.” Indeed, he said, the center has granted waivers to 94 percent of all applicants.
“That strikes me as a very high percentage,” said Senator Charles E. Grassley, Republican of Iowa. He suggested that the waivers were meant to limit political damage — “the amount of griping and complaining” about the law — before the 2012 elections.
The need for waivers is likely to continue. Federal rules require health plans to provide at least $1.25 million in coverage next year and $2 million in 2013. After that, the law generally prohibits annual dollar limits on coverage of essential health benefits.
In issuing the rules, the administration estimated that 18 million people were in health plans with annual limits.
Consumers have indisputably benefited from some provisions of the law. But for Democrats, the political benefits have been less than they expected.
“A lot of Americans just don’t know about some of the benefits,” said Senator Max Baucus, Democrat of Montana, who helped write the law as chairman of the Finance Committee.
A poll conducted this month by the Kaiser Family Foundation found that 42 percent of Americans had favorable views of the law while 46 percent viewed it unfavorably. Public perceptions of the law were slightly more negative than when it was passed. People most likely to benefit from the law — the uninsured and low-income households — were more likely to say they had too little information to know how it would affect them.
Under one of the law’s more popular provisions, young adults can stay on their parents’ insurance policies to age 26. Insurers generally cannot charge co-payments for preventive services like mammograms and colonoscopies; cannot rescind coverage after a person becomes ill; and cannot deny coverage to children with pre-existing conditions.
Medicare beneficiaries who use large amounts of prescription drugs can get discounts on their medicines. And some small businesses can obtain tax credits to help them pay premiums.
The biggest changes, including the requirement for people to carry insurance, take effect in 2014, when each state is supposed to have an insurance exchange, or market, where consumers can compare policies and buy coverage.
Senator Harry Reid, the Nevada Democrat and majority leader, said the law had already produced “miracles in the lives of people all over America,” enabling them to obtain health care that would otherwise have been out of reach.
At the same time, the State of Nevada has asked the Obama administration to relax the provision requiring insurers to spend at least 80 percent of premium dollars on health care. Brett J. Barratt, the state’s insurance commissioner, said that several carriers were likely to withdraw from Nevada’s individual insurance market if the federal government did not grant such relief.
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