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Waivers from Health Reform Law? Is the plan flawed?

Posted Oct 12 2010 9:44am

Waivers from Obamacare fast-tracked by HHS

McDonald’s, the United Federation of Teachers (with 351,000 members!) and others got a break this past week.  Quietly and without fanfare, the federal government granted them, and other high-profile companies and organizations waivers allowing them to opt out of a key mandate in the new health care law. The United Agricultural Benefit Trust (a California coop offering coverage to farm workers) was allowed to exempt 17,347 people. San Diego-based Jack in the Box’s waiver is for 1,130 workers, while McDonald’s asked to excuse 115,000. The waivers being granted at this time are for one year.  They have been granted to at least 30 major employers, insurers and unions, representing over 1 million employees.  These waivers will allow those companies and unions to maintain coverage which is minimal and far below the new laws requirements. In the case of McDonald’s, and other employers, many of their plans are designed to offer some coverage to the many thousands of part-time workers they employ. The largest waiver was for the aforementioned United Federation of Teachers Welfare Fund in New York, whose mini-med plan has 351,000 enrollees. Other waivers were approved for CIGNA Healthcare (265,000 enrollees), Aetna Inc. (209,423 enrollees) and BCS Insurance Group (115,000 enrollees)

Administration officials have defended these actions as a protection for lower wage workers who desire coverage by trying to avoid the creation of a new group of of uninsured Americans before other options are available.  However, it is the massive health bill which has actually created this problem. Obama administration officials have tried to soften stepped up resistance to implementation of the new health bill by allowing these exemptions. In addition to complaints from unions, insurers and companies about the new laws current levels of benefits, a number of leading insurers, including WellPoint, Aetna and Cigna, have also objected to rules requiring them to cover  children who are seriously ill.  They have warned that they will simply stop selling new policies in some states because the rules do not protect them from having to cover too many sick children. In some states we are aware of insurers offering so called “family coverage” but not insuring children at all to get around the new requirements.  In some cases they are limited or eliminating the term family coverage all together.

Officials in Washington and policy consultants have countered that implementation and transition would always be considered the hardest part of the health plan.  Many predict that more and more companies will petition the government to delay, weaken or repeal various regulations.  Some feel that this will continue until the law is fully implemented in 2014.  However, many others are equally skeptical.

President Obama’s hand picked director of the Office of Health Reform, Nancy-Ann DeParle, has openly admitted that concessions given to companies and insurers are attempts to avoid people losing coverage before the full law goes into effect.  She has argued that it is a “balancing act” and that the President is hoping to create a smooth pathway to get to 2014.

White House officials are struggling with implementation of the widely unpopular health reform law in the run up to the mid-term elections. Regulations are gradually being rolled out, with many more to be issued over the years to come. If past history is any guide, a Congressional bill that totals over 2,400 pages is likely to generate two to three times that many pages in new regulations.  The real threat of companies dropping their coverage due to the new law has evolved into this falls most problematic political issue.

Officials indicate that to date all but one waiver has been granted.  It is also unknown just how many waivers are pending at Health and Human Services (HHS). Since the waivers presently only extend for one year, many believe that employers will continue to seek renewals, as well as new or similar waivers as future limits and provisions of the health bill come into effect.  The health care reform law sets minimum annual limits on health expenses at $750,000 effective after September 23, 2010. This amount rises to $1.25 million September 23, 2011, to $2 million September 23, 2012 through January 1, 2014. In 2014, annual limits will be banned except for a few cases.

Lobbyists are very interested in securing waivers for clients.  They have not been surprised that the administration chose not to publicize them.  Some lobbyists have opined that the administration has been happy to keep these waivers low key. Others have commented that they too would have kept these hidden out of fear that other companies would hop on the waiver bandwagon.  The premise of the administration, said one lobbyist, that it can set a reform package, then impose expensive mandates, and expect it to be followed is totally invalidated by the waiver process.

Again, with elections coming up November 2nd, the timing could not be worse for the White House or Congressional Democrats. The major political issue here is that the President, Speaker Pelosi and Majority Leader Reid all promised that no person would lose the health coverage they have. It turns out this is not the case since here, one month before the election, some 1 million workers have been faced with loss of the coverage they had – that is unless the waivers were granted.

A recent survey (Mercer, LLC NY, NY) found the annual benefit provided by most mini-med plans (for those employers with at least 20,000 employees) was $10,000 in 2009.  Only 7% of all employers with 500 or more employees offer any kind of mini-med plans. Proposals in the health care reform law would allow low-wage employees to qualify for government-subsidized coverage that will be available from insurers offering coverage through new state insurance exchanges starting in 2014, supposedly reducing the need for mini-med plans.  Of course this assumes the plan is implemented as envisioned.  It also adds credence to critics who warned that many employers would simply drop coverage all together forcing many into the government controlled exchanges.  Of course, for some on the left, this is music to their ears, for as more persons are added to government controlled health insurance it moves the nation one step closer to their goal of single payer, government run health care . . . fully socialized medicine by any definition . . . obi jo and jomaxx

Obama Administration Grants Health Care Waivers to Big Companies, Unions – http://www.foxnews.com/politics/2010/10/08/obama-administration-grants-health-care-waivers-big-companies-unions

Waivers Aim at Talk of Dropping Health Coverage – http://www.nytimes.com/2010/10/07/business/07insure.html

Obama grapples with implementing unpopular health law before Nov. – http://thehill.com/blogs/healthwatch/health-reform-implementation/123305-obama-grapples-with-implementing-unpopular-health-law-weeks-before-election

White House defends waivers from new health law – http://www.wral.com/business/story/8417118/

McDonald’s, 29 other firms get health care coverage waivers – http://www.usatoday.com/money/industries/health/2010-10-07-healthlaw07_ST_N.htm

A third of employers may be penalized for health coverage deemed ‘unaffordable’ – http://www.mercer.com/summary.htm?idContent=1378875

HHS swiftly OKs waivers for ‘mini-med’ sponsors – http://www.businessinsurance.com/article/20101010/ISSUE01/310109971#

White House defends waivers from new health law – http://srnnews.townhall.com/news/Health/2010/10/07/white_house_defends_waivers_from_new_health_law

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