By Bob Cusack and Julian Pecquet
The Obama administration is grappling with implementing the unpopular healthcare reform law in the weeks leading up to the midterm election.
Some regulations establishing the rules of the various pieces of the health overhaul passed by Congress have been issued, and others will be released in the years to come. But the threat of employers dropping their coverage because of the new law has emerged as a thorny political problem this fall.
The timing could not be worse for the administration as undecided voters are making up their minds on which congressional candidates to support on Nov. 2.
Republicans are hammering Democrats on what they call “ObamaCare” while congressional Democrats, by and large, avoid the topic. A new poll by The Hill of 12 battleground districts in the House found that nearly one in four Democrats support a repeal of the health law.
In a June 22 speech touting healthcare reform, President Obama said, “So, starting in September, some of the worst abuses will be banned forever.” He listed several aspects of the law, including an elimination of “restrictive annual limits on coverage.”
At the time, Obama said, “Those days are over.”
But for nearly a million people, those days are not over yet.
Desperate not to violate the president’s pledge that people who like their coverage will be able to keep it, the administration recently granted 30 waivers from annual limit restrictions. Those waivers were quietly posted on the Department of Health and Human Services (HHS) website — without drawing attention to the fact that they’re exempting from the law’s patient protections plans that offer some of the weakest coverage.
An administration official said all but one of the requested waivers was granted, but the source was unclear which company was denied. It is also unclear how many waiver requests are pending at HHS.
The waivers are only valid for one year, raising the possibility that more employers will seek them in the future as the limits increase every year.
The healthcare reform law sets the annual-limit floor for health plans at $750,000 for plan years beginning on or after Sept. 23, 2010. The annual minimum rises to $1.25 million for plan years starting Sept. 23, 2011, and again to $2 million for plan years starting between Sept. 23, 2012, and Jan. 1, 2014. Starting in 2014, annual limits will be banned, with some exceptions.
Lobbyists say their clients are very interested in securing waivers and are not surprised that the administration didn’t issue press releases on them.
A lobbyist who requested anonymity said, “If I were them I’d hide these exemptions too. They have to be worried about other companies seeing this and following suit. If you hit a critical mass of exemptions, it seems to me that a major assumption of the reform package — that the government can simply set an expensive mandate and expect it to be followed — falls apart.”
Administration officials dispute the notion they buried the announcements, pointing to a notice in the Federal Register and a list of the approved waivers on the HHS website.
During his Thursday briefing at the White House, press secretary Robert Gibbs was asked six different questions on the HHS waivers. The tenor: Now that the administration has started granting waivers, where will it stop — and doesn’t doing so undermine healthcare reform?
“I’m not worried that the dam is going to burst,” Gibbs answered, referring to a potential deluge of waiver requests.
The debate on this issue heated up last week after The Wall Street Journal reported that McDonald’s was threatening to drop coverage for 30,000 employees if the company didn’t get a waiver from the law’s medical loss ratio requirement for its so-called “mini-med plans.”
The administration pushed back hard against the story, claiming it was too early to speculate on who was going to get waivers for the medical loss ratio since the regulations putting it in place don’t even exist yet.
HHS Secretary Kathleen Sebelius also told reporters that the administration was being flexible with employers to help them keep their coverage. She then revealed that McDonald’s had been granted a waiver from the annual limits provision of the law within 48 hours of asking for it. Other companies that received waivers included CIGNA, Denny’s and Aetna.
The HHS waivers may have assuaged employers, but they prompted infuriated healthcare reform advocates to strongly criticize the administration.
The single-payer advocates at Physicians for a National Health Program argued that this is one more example of why Medicare for all would have been a much better solution than Democrats’ attempt to more thoroughly regulate the private health insurance market.
“Is HHS really that sympathetic to employers while being so uncaring about the needs of their employees?” senior policy fellow Don McCanne said in a statement. “I mean waivers … not just waivers … but expedited waivers! Just what was reform supposed to have accomplished?”
New York Times columnist David Leonhardt weighed in on Wednesday, noting that McDonald’s main health plan offers $2,000 worth of benefits a year — a far cry from the $750,000 minimum called for in the reform law. Getting rid of such plans, he suggested, should be embraced rather than avoided.
The healthcare reform law “does represent progress,” Leonhardt wrote. “The fact that it is beginning to disrupt the status quo — that some insurance policies will eventually be eliminated and some inefficient insurers will have to leave the market altogether — is all the proof we need.”
HHS spokeswoman Jessica Santillo said, “HHS is to committed strengthening employer-based coverage for employees and retirees, while building a bridge to a new competitive marketplace in 2014. Applications for waivers from annual limit requirements are reviewed on a case-by-case basis by Department officials who look at a series of factors including whether or not a premium increase significantly exceeds medical inflation or if a significant number of enrollees would lose access to their current plan because the coverage would not be offered in the absence of a waiver.”