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“No More Waivers for You!”

Posted By Edmund Haislmaier On June 21, 2011 @ 10:28 am In Obamacare,Ongoing Priorities | Comments Disabled

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In a classic case of the “Friday afternoon news dump,” last week the Department of Health and Human Services (HHS) announced [2] that it is closing the process to apply for a waiver to Obamacare’s annual limits provision in September.

Both the timing and substance of this decision confirm that HHS’s annual limit regulations and the decision to grant waivers was a public relations strategy gone bad. Friday’s announcement was little more than a move by the Obama Administration to limit further damage from a self-inflicted wound.

Obamacare’s drafters included in the legislation a prohibition on insurers and employer plans imposing annual dollar limits on coverage. But they failed to anticipate how these rules would adversely affect limited benefit (or “mini-med”) health plans and Health Reimbursement Arrangement (HRA) plans. Rather than recognizing the problem and avoiding it through one of at least three alternative fixes [3], Obamacare instead told HHS to define and apply a “restricted annual limit” to plans between September 2010 and January 2014.

The result was a public relations dilemma. If HHS set a high-dollar figure for the “restricted annual limit,” then millions of lower-wage workers would lose their coverage as a direct result of Obamacare. Such an outcome would not bode well for an Administration trying to defend a deeply unpopular law.

Conversely, HHS could have set a very low restricted annual limit—say, $10,000. Under that scenario, no one would lose coverage, but neither would anyone benefit from the new provision. But since the new rule on annual limits is one of only a handful of Obamacare provisions scheduled to take effect before 2014, and the President is faced with re-election and widespread opposition to his signature legislative achievement, HHS is desperate to show that somebody, anybody, is actually benefiting today from Obamacare.

Thus, HHS hit upon the strategy of imposing higher annual limits to make it look like people are benefiting from Obamacare while slipping into the regulations a waiver program that allows HHS to exempt plans that might drop coverage if forced to meet the new limits.

However, the waiver program soon attracted negative public attention, particularly because the very process invited suspicions of political favoritism. HHS even compounded its error by setting not one but three interim annual limits for health plans and then granting waivers for only one year at a time. This was a clear recipe to keep the issue in the news, as every plan that was granted a waiver would need to reapply in the next year with additional plans applying as the limit increased.

Friday’s announcement indicates that the Administration finally realized that when you’re in a hole, stop digging. Ending the waiver approval process, however, won’t likely mean the issue will fade away. Thousands of health plans and millions of enrollees will still be operating under waivers until 2014.

Something else that also won’t go away is the lesson about the nature of Obamacare and its attempt to micromanage America’s health system. Not only did Congress and the Administration get the policy, legislation, and public relations surrounding this relatively small piece of Obamacare all wrong; they also failed to correctly estimate how many people would be affected.

On its Web site [4], HHS states, “The number of enrollees in plans with annual limits waivers is 3.2 million, representing less than 2 percent of all Americans who have private health insurance today.” By comparison, in the regulations HHS issued [5] last June, HHS estimated (in table 3.3) that a total of 2.2 million individuals are currently in plans with an annual limit of $1 million or less. Thus, HHS has already waived 150 percent of the people they thought might need waivers.

Errors of that magnitude—on something this simple—are not likely to engender public confidence in central planners’ ability to administer the other, more complex, costly, and intrusive parts of Obamacare. In life, less is oftentimes more, and no better example exists than in health care legislation. Congress should scrap Obamacare’s health care central planning design and replace it with a much shorter list of simple, targeted, and limited health reforms.

 


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URL to article: http://blog.heritage.org/2011/06/21/%e2%80%9cno-more-waivers-for-you%e2%80%9d/

URLs in this post:

[1] Image: http://www.foundry.org/wp-content/uploads/obamacare-chart.jpg

[2] the Department of Health and Human Services (HHS) announced: http://www.cms.gov/apps/media/press/release.asp?Counter=3986&intNumPerPage=10&checkDate=&checkKey=&srchType=1&numDays=3500&srchOpt=0&srchData=&keywordType=All&chkNewsType=1%2C+2%2C+3%2C+4%2C+5&intPage=&showAll=&pYear=&year=&desc=&cboOrder=date

[3] three alternative fixes: http://www.heritage.org/Research/Testimony/2011/03/HHS-Waivers-of-Regulations-on-Health-Plan-Annual-Benefit-Limits

[4] Web site: http://cciio.cms.gov/resources/files/approved_applications_for_waiver.html

[5] regulations HHS issued: http://edocket.access.gpo.gov/2010/pdf/2010-15278.pdf

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