Hundreds of employers have received federal waivers from a new requirement in the health-care overhaul law.
Government figures show that 733 applicants, mainly employers and union-affiliated insurers, received an exemption from a requirement that puts their plans on the hook for up to $750,000 in eligible medical bills for each covered worker this year. Most of those plans now have reimbursement limits that are a fraction of that amount.
The concern is that without such waivers, employers could raise premiums so high it would be unaffordable for workers, or they would simply drop coverage altogether.
The Department of Health and Human Services said more than 500 of the waivers were issued in December. Many of the plans are limited-benefit “mini-med” policies often favored by lower-wage employers.
The corporate recipients include PepsiCo Inc.; DineEquity Inc., the parent company of the IHOP and Applebee’s restaurant chains; and the Foot Locker Inc. athletic chain, HHS says. Plans for unionized workers also received about a quarter of the waivers, including those represented by the Teamsters and the United Food and Commercial Workers.
Last fall, McDonald’s Corp. warned HHS it could drop its plan for store workers unless it got a waiver to the law’s requirement that insurers spend at least 80% of premiums on medical care. HHS granted the fast-food chain’s insurer a waiver to its annual benefit payout limit, and crafted the premium-ratio regulation to make it twice as easy for McDonald’s carrier and other insurers to meet the requirement.
McDonald’s insurer also received a waiver from the $750,000 benefit payout cap. It and other plans that received a waiver don’t have to comply with that rule for 2011 for the 2.1 million Americans they insure. The health-care law enacted last year requires that those yearly caps eventually be phased out altogether.
The exemptions are raising concerns that the federal government is giving too many employers and unions a pass on the law, and selectively enforcing its requirements. Some proponents of the law worry the waivers mean too many consumers are missing out on provisions designed as protections against high medical expenses.
Opponents say the waivers are evidence that the law is flawed. “If this is such a good bill, why do they want out?” Sen. John Barrasso (R., Wyo.) asked reporters Tuesday. He and Sen. Lindsey Graham (R., S.C.) have introduced a bill to allow states to opt out of the law’s requirement that residents carry insurance and employers pay for it, among other things.
Steve Larsen, a director in the HHS Office of Consumer Information and Insurance Oversight, said the waivers were intended to act as a temporary solution until 2014, when employers will have more opportunities to secure affordable coverage through state-based insurance exchanges that are part of the law. The Obama administration doesn’t want employers dropping coverage on account of the law, a potential outcome if firms were forced to enrich their benefits substantially.
“We’re not picking and choosing,” he said. “To the extent that anyone satisfies the public criteria for a waiver, then they’re eligible for a waiver.” A higher number of employers submitted waiver requests at the end of the year to get them in time for plans that renewed Jan. 1.
Mr. Larsen said the number of enrollees receiving waivers represented about 1% of Americans who have private health insurance. He added that the law called for the HHS secretary to implement the law in a way that minimally impacts people’s existing coverage and the price they pay for it, and the waivers help do that.
Republicans say the high number of union workers receiving waivers seems contradictory, given that organized labor was among the most vocal supporters of the health overhaul.
Galen Munroe, spokesman for the International Brotherhood of Teamsters, said these plans “may not be equipped to handle the current annual maximum of $750,000. These waivers can act as a bridge to 2014, when additional options will be available.”
