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HHS Waivers and the Three I’s of Obamacare



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Yuval Levin has made the important point that, when HHS granted waivers exempting some employer health plans from Obamacare’s prohibition on annual benefit limits, it was the “kind of government by whim, and not by law” that is “the essence of the regulatory state.” It is indeed a very troubling effect, and one that will be a byproduct of numerous other Obamacare provisions as well.

That said, it is worth noting that the “McDonald’s issue” also highlights the ignorance and incompetence behind the crafting of this health-care legislation.

As to the first: Anyone with more than a passing familiarity with health-insurance markets should be aware of the existence of the so-called “mini-med” plans in question. Mini-med health plans are essentially the mirror image of “high-deductible” plans. They cover routine care with little or no co-pays, but not major medical expenses. Most people probably don’t know that, it’s true, but it’s simply inexcusable to be a congressman (or a congressional health staffer) responsible for writing this legislation and not realize that prohibiting health plans from setting annual coverage limits will drive mini-med plans out of the market.

As to the second: Setting aside whether or not one thinks it’s good public policy to regulate mini-meds out of existence, consider that Obamacare’s designers had not one, but two very simple legislative fixes available to them, both of which could easily have prevented the substantive (and public-relations) problems they created for themselves on this score.

One option would have been to simply delay the effective date of the prohibition on annual coverage limits until after 2014, when the legislation’s new subsidies for more comprehensive coverage become available to workers losing their current mini-med coverage.

The other option would have been to exempt mini-meds plans from the new coverage requirement by definitionally excluding them as a form of “supplemental coverage.” This second approach even has a statutory precedent that Obamacare’s designers should have been well aware of. Specifically, the 1996 Health Insurance Portability and Accountability Act (HIPAA) — Congress’s first and much more limited foray into federal regulation of health plans — established a list of “supplemental” coverages that are exempted from requirements imposed on comprehensive medical insurance. Such exempted insurance products include dental-only, vision-only, workman’s compensation, long-term care, etc. Obamacare does nothing to alter those existing statutory exemptions, and Congress could easily have avoided this issue by adding mini-med plans to that list.

Thus, if the McDonald’s plan in question were instead, say, a dental plan, the coverage would clearly be exempt — under both current law and Obamacare — and it would never have become an issue or a PR problem for the administration and for Obamacare supporters.

While this may all seem somewhat arcane, it is far from arcane to the million-plus workers for whom continuation of their current coverage is now contingent on the politically motivated decisions of HHS political appointees.

The whole law is bad policy. But even if one agrees with the policy, one can still recognize that the legislation itself was badly executed. The way for conservatives to drive Obamacare’s negatives even higher than they already are is by repeatedly reinforcing the theme that Obamacare is the product of three “I” words: ideology, ignorance, and incompetence. The more negative the public’s opinion of Obamacare becomes, the more likely repeal becomes, regardless of the partisan make-up of the next Congress.

So far, conservatives have done a fairly good job focusing on the ideology part, but we can do more to highlight the other two. It is also a message conservatives can take to those who may not object to Obamacare’s ideological underpinnings as strongly as we do, but who will become increasingly disillusioned with its results as they unfold.

Edmund F. Haislmaier is a senior research fellow in health-policy studies at the Heritage Foundation.



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