Health-care reform doesn’t really begin delivering its benefits until 2014. Between now and then, the administration is trying to do two things: (1) increase public support by delivering early benefits, and (2) decrease public (and industry) opposition by minimizing disruption. The waivers are how the administration is handling the instances when priority No. 1 and priority No. 2 collide. As Steven B. Larsen, director of the federal Center for Consumer Information and Insurance Oversight, told Pear, the waivers are a “bridge to 2014” — they’re a way for the administration to try and ride out the period between health-care reform being passed and health-care reform actually starting to work.
Here’s an example: One of the early deliverables — the benefits delivered before 2014 — in health-care reform is a rule stating that insurers couldn’t impose annual caps on benefits that were lower than $750,000. This is a popular idea, so the administration was excited to implement it and campaign on it. “If you get sick, health-care reform is protecting you right now!” But the rule also requires insurers to raise premiums or change plans — and there are no offsetting subsidies or new choices or costs controls, as there will be in 2014. So when large corporations like Ruby Tuesday came to the administration and said that this would mean massive disruption in the health plans they offer and they’d scream very loudly and create a lot of bad press coverage for the bill, the administration gave them a waiver.
That’s happening a lot. The administration brags that it’s being flexible, but as the Heritage Foundation’s Edmund Haislmaier told Pear, it means the waivers “result in unequal application of the law and create a temptation to engage in political favoritism.” I’d say the issue is less political favoritism than threat avoidance, but the outcome is the same: Powerful players get to opt out, at least for now. Incidentally, the regulators hate the waivers, too: The people implementing the law want the law implemented and don’t want to have to back off from what they see as good policy every time a corporation or union raises a fuss. They feel the White House is being far too cautious, and it’s coming at the expense of good policy.
I agree with them, and with Haislmaier. To some degree, I consider this original sin: When the bill’s start date was pushed back to 2014, a period like this one became essentially inevitable. The reality is that before the exchanges and the subsidies are set up, we don’t have the structure needed for the new regulations to benefit consumers, which is what is needed for industry complaints to be ignored. After 2014, it doesn’t matter if McDonald’s stops offering useless mini-insurance plans because the whole point of health-care reform is to give people access to decent insurance plans. The changeover will include some disruption, but it’ll be a positive kind of disruption, like trading in an old clunker for a new car. But between now and 2014, when we have no way of giving McDonald’s employees better insurance, it’s bad disruption for McDonald’s to be barred from offering the crummy plans they’re currently offering. Something is better than nothing, and that’s why McDonald’s is getting a waiver, and why health-care reform should’ve started much faster.