JONATHAN COHN MARCH 21, 2011
The Obama Administration has, over the last year, issued several waivers to companies and states, temporarily granting them exemption from some requirements in the Affordable Care Act. Actually, “several” would be an understatement. Earlier this month, on a Friday, the Administration announced it was granting more than 100 new waivers. As The Hill subsequently reported, that brought the total number of waivers issued to more than a thousand.
Critics say the waivers are proof that the law is unworkable. I’d argue the waivers are proof of something else: That introducing a series of health insurance reforms slowly, in piecemeal form, is more difficult than introducing all of them at once.
Remember, the bulk of the Affordable Care Act’s changes to the insurance market will not take effect until 2014. That’s the date by which states must set up insurance exchanges, insurers must start offering uniformly priced policies to everybody, the federal government will start making subsidies available, and so on. But the Act’s architects didn’t want to make Americans wait four years to see all of the law’s benefits, so they decided to introduce the most straightforward and simple reforms earlier. Those benefits are the ones you’ve heard so much about lately: Requiring insurers to let children stay on their policies until they are 26, making sure insurers don’t spend more than a certain percentage of revenue on administrative overhead, etc.
But imposing these requirements early, without the rest of the Act's infrastructure, is actually tougher than it sounds. Among other things, it means disrupting current arrangements. Fast-food restaurants, for example, typically only offer "mini-med" policies that offer virtually no meaningful coverage. But if the federal government forces those restaurants to offer better health plans--i.e., to offer employees real insurance--the restaurants will end up charging employees more for these policies or perhaps dropping them altogether.
That’s no problem if the government is also offering an alternative, more affordable form of coverage, as part of a broader health care overhaul. And that is precisely what will happen in 2014, once the government introduces those new insurance exchanges and starts giving individuals subsidies to help pay for insurance. But to impose all of the new requirements on policies now, before the exchanges are running, would probably leave some people with no coverage at all. “We don’t want to take away people’s health insurance before they have some realistic other choices,” Health and Human Services Secretary Kathleen Sebelius told The Hill earlier this year.
But waivers present their own problems. As Robert Pear notes today in the New York Times, the administration has given waivers to Ruby Tuesday’s and Waffle House, among other restaurants. The waivers are narrow: The administration has exempted these establishments, temporarily, from requirements that policies cover up to $750,000 a year in medical expenses. But that means the employees of those two companies don’t benefit from that protection. The same goes for other people covered by waivers--at least 2.8 million, according to Pear. It creates political problems, too, as critics seize on these waivers as proof of the law’s flaws. That’s particularly true when the waivers go not to small businesses but to unions, which are politically close to the administration.
Could the administration do things differently? The more waivers I see, the more I worry that the administration, eager to avoid headlines about disruption, is granting them too easily. But I haven’t looked at the individual waivers closely and, as I said, the dilemma here is real. One key issue to watch: Is the Administraiton as willing to grant waivers to states like Florida, which clearly wants to wriggle out of the law altogether, as it was to Maine, which has an insurance commissioner committed to reform and a unique health insurance market that may require special treatment.
Update: I wrote originally that the waivers for fast-food restaurants covered "some" of the law's protections. According to the administration, the waivers cover only the annual limits regulation. All of the law's other protections still apply. That's an important distinction and one that makes me feel a bit more confident about the way the administration is approaching these.