Government Exempts Almost A Million Workers From ACA’s Consumer Protections

stoolBloomberg is reporting that “almost a million workers, one-third of them members of New York’s teachers union, were left out of a consumer protection in U.S. health law meant to cap insurance costs after the government exempted their employers.” “Thirty companies and organizations, including Jack in the Box Inc. and the United Federation of Teachers, won’t be required to raise the minimum annual benefit included in low-cost health plans covering seasonal, part-time or low-wage employees.”

The waivers are intended to prevent employers that offer so-called mini-med plans — subprime insurance that restricts the number of covered doctor visits or imposes a relatively low maximum on insurance payouts — from dropping coverage, but there is also very real concern that this approach would deprive too many workers of the law’s protections:

The waivers are effective for a year and were granted to insurance plans and companies that showed employee premiums would rise significantly or that workers would lose coverage without them, Ms. Santillo said in an e-mailed statement. The administration announced the waiver program in a Sept. 3 memo.

Without the waivers, companies would have had to provide a minimum of $750,000 in coverage next year, increasing to $1.25 million in 2012, $2 million in 2013, and without limit in 2014. Allowing a waiver for plans with limits much lower than this will ensure that those beneficiaries will “not be denied access to needed services or experience more than a minimal impact on premiums,” the administration memo said.

To be sure, HHS is in a rather tough spot. If companies respond to the new regulations by dropping insurance coverage, low-wage employees will have to either go uninsured until 2014 (when the exchanges kick in) or try to enroll in Medicaid or the new high-risk insurance pools, for which they may be ineligible and may have some trouble affording. As Aaron Carroll of the Incidental Economist explains it, Democrats are facing the three-legged-stool problem. You can’t give people access to affordable coverage without regulating the insurers, getting everyone into the risk pool through the mandate and providing subsidies for those who need them, but the law implements the regulation leg four years before the subsidy and mandate legs are even attached. And so what you’re seeing now is a stool that just can’t find its balance.

Consequently, the government is exempting these companies for a year to give them an opportunity to gradually adjust their plans so they can meet the new requirements. But Carroll predicts that the government will likely extend these exemptions through 2014. That makes for its own batch of bad headlines about the limited impact of the law’s consumer protections, but it seems to be a better solution than letting thousands of low wage Americans go without coverage.