Critics of the Affordable Care Act have long played the double-edged game of criticizing the law for offering the nation a one-size-fits all solution to the health care crisis while slamming the federal government for providing states and businesses with greater flexibility to comply some of the new provisions of the legislation. It’s a cynical game and one that Republicans are playing in order to portray the nearly 1,400 waivers distributed by HHS as evidence that the law isn’t working or that the administration is using the process to grant exemptions to and reward its political allies.
The Associated Press considered some of these claims :
Q: Unions are getting these waivers. Doesn’t that show that the Obama administration is rewarding political supporters?
A: Several unions have gotten waivers, but most seem to be going to employer plans, according to statistics from the Health and Human Services Department.
Q: So an office headed by an administration bureaucrat is able to waive the entire health care law?
A: Actually, no. Mainly its two provisions. And the waivers are time-limited. One is a regulation that says insurance plans can’t impose a per-patient limit of less than $750,000 a year for medical care, including hospital stays, doctor visits and medications. So far, about 1,400 annual limit waivers have been issued, an approval rate of more than 90 percent. They cover plans that serve about 3 million people, or 2 percent of those with private insurance.
The other provision is a requirement that insurance companies spend at least 80 percent of the premiums they collect on medical care and quality, as distinct from overhead and profits. Three states — Maine, New Hampshire and Nevada — have gotten what the administration calls “adjustments” to the 80-percent standard. Insurers in those states will be held to a lower requirement, say, 65 percent. State officials had feared that some insurers who sell coverage directly to individuals would be unable to meet the higher standard and would just leave.
Q: Why do they even need to issue waivers for these things?
A: The explanation is the same in both cases: Without waivers, several million people would be at risk of losing their coverage.
In other words, the waivers are acting as a “safety valve” until the coverage expansions go into effect in 2014. What’s really happening is that the administration is in a tough spot. If companies respond to the early regulations by dropping insurance coverage, low-wage employees will have to either go uninsured until 2014 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. As Paul Ginsburg put it, “I wouldn’t see that as special deals as much as bowing to reality.”