The Hill’s Julian Pecquet notes that Republicans have doubled down on their approach of criticizing both the potential coverage disruptions of the Affordable Care Act and the government’s efforts to minimize these changes. Republicans on the Energy and Commerce Committee have written a letter to HHS Secretary Kathleen Sebelius noting that they’re “deeply troubled that some 30 companies were forced to consider dropping coverage as a result of the law” and by HHS’ attempts to “exempt certain companies from new requirements so they can continue offering low-cost health plans.”

The letter includes various about the waiver process:

- According to USA Today, HHS has granted waivers so that “thirty companies and organizations…won’t be required to raise the minimum annual benefit included in low-cost health plans.” What companies or organizations were granted this waiver, and how many employees will this affect? Please provide a copy of both the waivers and a detailed description of the effects of the waivers.

- Have any companies or organizations asked for the waiver discussed in the USA Today article but not been granted one? If so, what companies or organizations were denied this waiver and why?

- As mentioned previously, according to the Wall Street Journal the issue is not merely whether the companies are granted waivers, but whether the insurers that offer these plans will be able to comply with new medical-loss ratios. Has HHS been contacted by any insurers to date about such a waiver to the ratio requirement? If so, please provide the names of the insurance companies that have done so. Has HHS granted any waivers of any kind to certain insurers, and if so what did those waivers entail?

- Exempting these employers from coverage requirements and penalties will likely affect the cost estimates of the health law. Has HHS calculated the effect of the waivers on the reported cost of the law? Please provide us with any information HHS holds on each exempted plan so that the impact of these exemptions may be examined.

The GOP will then use any answers to argue that the government is now arbitrarily picking winners and losers, thereby destroying America’s small businesses and job creators. As Rep. Mike Pence (R-IN) previewed the argument several weeks ago on local radio, “that’s why you don’t want a government takeover of health care, because all of the sudden you have bureaucrats with political power are going to be deciding…”

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 (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 and will likely extend these exemptions through 2014 and issue even more waivers in the months to come. But as we’re seeing, this will make for its own batch of bad headlines, but it seems to be a better solution than letting thousands of low wage Americans go without coverage.

I agree with Jon Gruber’s argument that the expectation that a large number of employers will dump coverage into the Exchanges is overstated. As Gruber writes, in response to this piece by Gov. Philip Bredesen (D-TN), this argument overlooks some fairly important real-world experiences:

The gist of Bredesen’s argument is pretty simple: Some firms will find it more attractive to stop offering insurance and let employees get coverage through the new insurance exchanges, where generous subsidies will be available. But the Affordable Care Act, which I’ve long supported, imposes strong penalties on firms that do not offer insurance, as well as sizeable tax credits for smaller firms that encourage them to offer. And in most firms, the majority of employees will make too much money to be eligible for large subsidies anyway. It is for this reason that the Congressional Budget Office estimated that PPACA will reduce employer sponsored insurance in the U.S. by only about 2.5 percent by 2019. In other words, the effect on employer sponsored coverage will likely be small.

CBO projections aren’t perfect, of course. But this particular projection is consistent with the best evidence we have–evidence that, once again, Bredesen completely ignores. In 2006, the state of Massachusetts put in place a system much like the one the Affordable Care Act will create nationally–with subsidies for low income groups (subsidies that are even more generous than those in the Affordable Care Act) and an individual mandate, but without the small group tax credit or meaningful penalties on firms that don’t offer insurance. The result? Employer-sponsored insurance has risen in the state by more than 100,000 persons.

Bredesen’s claim that employees would move from employer coverage to subsidized insurance in the exchange also ignores that the government is already subsidizing employer plans through the tax code and will continue to do so (at lower levels due to the excise tax) under the Affordable Care Act.

Economists and many Democrats generally agree that the ACA’s employer responsibility requirement could be strengthened and many supported a true pay or play provision that would have ensured less employer coverage erosion. But they were opposed by the very same conservative Democrats and Republicans who are now echoing Bredesen’s claims. Rather than shoring up employer sponsored insurance (ESI), these lawmakers instead listened to the hysterical arguments of groups like the National Federation of Independent Businesses (NFIB) and the Chamber of Commerce and strongly opposed the very provisions that would have avoided what they’re now predicting.

However, the general question of why employers choose to offer coverage is a good one and the best explanation I’ve heard argues that employers feel more comfortable with the existing system within which they themselves can define their contribution towards health care. In other words, rather than leaving it up to the government to set the amount they’ll have to contribute, companies want to be more in control of their own costs. Austin Frakt believes CEOs are wrong for thinking this, but agrees that employer coverage is here to stay.

This week, after several Republicans suggested that the GOP would only repeal parts of the Affordable Care Act, Republican senators sought to reassure their conservative constituency of the purity of their intent by reiterating their opposition to the entire health care law. “Let me be very clear,” Sen. Jon Kyl (R-AZ) told conservative radio host Hugh Hewitt. “The position of the Republican Senators, all of us, is to repeal Obamacare if we can. If we can’t, having tried to do so, we will do everything we can to defund all or parts of it, to shave parts of it off … to try to reduce the scope of the rules and regulations.”

But Republicans also say that they support some parts of the health care law — like the consumer protections that would prohibit insurers from denying coverage to individuals with pre-existing conditions. Those elements would help consumers but they’d be better off if Obamacare were repealed and replaced with similar provisions. As Sen. Richard Burr (R-NC) explained during his debate in North Carolina last night, “Those provisions are acceptable to me and most Republicans and most Americans,” he said. “I think it’s important to realize we could have the elimination of pre-existing conditions tomorrow. We could have the elimination of lifetime caps tomorrow. We could begin to close the doughnut hole tomorrow. But you can’t fix the current health care bill that the president passed.”

So would Republicans really adopt strong consumer protections? It’s unlikely. The House Republicans’ ‘Pledge,’ for instance, guarantees coverage regardless of pre-existing condition only to those beneficiaries who had been previously insured. The uninsured can still be denied coverage. Similarly, a bill offered by Sens. Burr and Tom Coburn (R-OK) in May of 2009 encouraged states to “establish rational and reasonable consumer protections,” but did not eliminate the practice of denying coverage nationwide. Throw into this mix yesterday’s comments by Sen. John Cornyn (R-TX) and you quickly get the sense that any GOP pre-existing condition provision would be limited at best:

SIEGEL: But the basic change here, the government has expanded the entitlement to health insurance. Do you hope to see that expansion undone as a matter of federal law?

CORNYN: I think the way it was done is problematic because it imposes a fine on individuals who don’t carry health insurance, but it says, on the other hand, that if you get sick, that an insurance company must issue you a policy regardless of your preexisting conditions and the like, which is driving up the cost of insurance. I think the model, to me, the ideal model is one that we’ve seen used in companies like Whole Foods Company in Austin, Texas, using health savings accounts.

Cornyn, of course, has it backwards. You can’t require insurance companies to “issue you a policy regardless of your preexisting conditions” unless you impose “a fine on individuals who don’t carry health insurance.” If you don’t find a way to encourage people who otherwise wouldn’t have bothered with health insurance to buy coverage, you can’t eliminate the pre-existing condition denials. That’s because without a mandate that brings healthy people into the program, the provision requires insurers to accept individuals who waited too long to purchase coverage. These sicker applicants would use up a lot of health care and drive up costs for everyone else in the pool, pushing out younger and healthier applicants (and their premium dollars). Only sick people who desperately need coverage would remain in the plan and as Kentucky, Main, New Hampshire, New Jersey and many other states have all found out, that’s a prescription for failure.

So the larger point here is that no matter what Republicans tell you about pre-existing conditions, without a mandate, they can’t possibly replace the existing consumer protections. All they can offer is some inferior provision that look a lot like the existing HIPAA law and won’t do much for the uninsured.