The number of companies and labor unions winning temporary waivers from health reform has spiked to 733, more than triple the 222 granted in November 2010, and up dramatically from 30 in October.
The 722 figure includes 182 union plans, or what the Department of Health and Human Services [HHS] calls “collectively-bargained plans.” The waivers largely have to do with so-called “mini-med” plans, which can cap total coverage payouts at a tiny $5,000 annually.
In 2014, the health-reform bill will end mini-med plans. Right now, 2.28 million workers are enrolled in mini-med plans that received these temporary waivers for one year, the administration says.
The administration and HHS, which oversees the waivers, are defending these temporary exemptions to FOX Business, saying the waivers in question are just one-year exemptions from health reform and are necessary so workers will get continued coverage up until the time when the new law is phased in by 2014.
An HHS spokeswoman tells FOX Business that “just over 50 applications had been denied [waivers] as of the end of December.” But HHS won’t name names, to respect the confidentiality of the companies or unions involved, sources say.
Republican Senator Orrin Hatch of Utah is now demanding detailed answers about the waiver process in a letter he sent this week to Donald Berwick, Administrator of the Centers for Medicare and Medicaid Services [CMS]. CMS oversees implementation of the new health reform law. FOX Business has obtained the Senator's letter.
The senator, a ranking member of the Senate Finance Committee with oversight of CMS and HHS, says he wants more transparency, evidently in an effort to ensure no political favoritism. Sen. Hatch notes in his letter that “my home state of Utah has numerous small businesses and I have heard from many of them asking why they were not able to get waivers like the 700 plus entities who were able to receive them. Many of these businesses had not even heard there was a waiver process.”
Congressmen Fred Upton (R-Mich.) and Cliff Stearns (R-Fla.), Republicans on the Energy and Commerce Committee, wrote to HHS secretary Kathleen Sebelius late last year demanding answers, too.
We broke news about this controversy last December, (Dec. 8, 2010, EMac’s Bottom Line, “More Unions and Companies Win Health-Reform Exemptions,” and "State of the Union: Addressing Health Reform" . The reason for the spike higher to 733? HHS attributes it to the fact that “December 1 was the final day to apply for a waiver for a plan or policy year that begins on January 1 – as many plans do.”
HHS also notes that “over 500 waivers were granted in December” alone.
The waivers raise a slew of additional questions, including whether it is fair that other businesses and entities who didn’t win waivers must follow the health-reform rules while their competitors who won waivers do not.
Also, health reform did not spell out in detail who can get these waivers -- government officials are making these decisions behind the scenes. Additionally, Republicans on the Energy and Commerce Committee are also asking how the waivers will affect the budget outlook for the health-care reform law, since the waivers “affect predicted coverage requirements and penalties for non-compliance.”
And the question for taxpayers is this: Since companies are getting waivers from health reform, will it be just as easy for taxpayers to get waivers on the individual mandate, which says everyone must buy health coverage or pay an annual fine, anywhere from $750 per person to not more than $2,250 per household? (The Congressional Budget Office estimates the government will raise $69 billion over ten years from this fine -- $17 billion from individuals, $52 billion from companies.)
The waiver craze started last year, when McDonald’s (MCD) threatened to drop its mini-med plans, covering an estimated 30,000 workers, if it did not receive an exemption.
The reform act is pushing to get taxpayers access to cheaper, more comprehensive health insurance plans that don’t shortchange them via high deductibles or annual benefit limits.
HHS says the new “law requires insurers to phase out the use of annual dollar limits on benefits. In 2011, most plans can impose an annual limit of no less than $750,000” in benefit coverage.
A spokeswoman for HHS tells FOX Business that “these are not waivers from complying with the Affordable Care Act. They are a one-year waiver from complying with the annual limit restriction provision in the law,” and that “annual limits are being phased out between now and 2014 -- this year, plans can’t have an annual limit of less than $750,000.”
The HHS spokeswoman adds: “These plans have to comply with the other parts of the law, and there is a new transparency piece that requires them to tell enrollees that their coverage has a low annual limit and doesn’t meet the requirements on annual limits under the (new) law.”
Mini-med plans, HHS notes, “do not provide security in the event of serious illness or accident” but “they are unfortunately the only option that some employers offer.”
To get the waiver, a company or union must certify “that a waiver is necessary to prevent either a large increase in premiums or a significant decrease in access to coverage." They must also prove that they notified their workers “that their plan does not meet the requirements of the Affordable Care Act,”among other things.
The following companies joined in the race to get temporary waivers before the Dec. 1 deadline, and won: 24 Hour Fitness; American Eagle Outfitters; Andersen Corp.; The Talbots, Inc.; Joseph Gallo Farms; EchoStar; First Acceptance Corp.; O'Reilly Auto Parts; Telesis Management Corp.; Dole Food Co.; Foot Locker; Fresh Express; Adecco Group; North State Bank; Ruby Tuesday; Cracker Barrel; DISH Network; Meijer Grocery stores; Big Lots, Inc.; Jack in the Box; and Darden Restaurants.
Whole cities and towns, including Lockport, N.Y., and Newark, N.J.’s non-union plan, won temporary waivers, as did the Battery Park City Authority in downtown Manhattan, N.Y. Foundations won waivers, too, including the Henry Luce Foundation, Pew Charitable Trusts and the Robert Wood Johnson Foundation. So did health insurers, including Cigna and Aetna.
And HHS provides more details on the plans that got waivers:
*Employment-Based Coverage: Most of the plans that got waivers – “712 plans representing 97 percent of all waivers” – were given to employment-related health plans, HHS says.
*Labor Unions: HHS says: “182 collectively-bargained plans have received waivers.” It says that “most of the other health plans receiving waivers are multi-employer health funds created by a collective bargaining agreement between a union and two or more employers, pursuant to the Taft-Hartley Act.” HHS adds that “these ‘union plans’ are employment based group health plans and operate for the sole benefit of workers. They tend to be larger than other typical group health plans because they cover multiple employers. There are also single-employer union plans that have received a waiver. In total,
*Health Reimbursement Arrangements (HRAs): 171 HRAs got waivers, HHS says. “It says these are employer-funded group health plans where employees are reimbursed tax-free for qualified medical expenses up to a maximum dollar amount for a coverage period.”
*Health Insurers: Sixteen waivers were granted to health insurers. Why did they get waivers? A health insurer “can apply for a waiver for multiple mini-med products sold to employers or individuals.”
*State Governments: Four state governments got waivers, Massachusetts, New Jersey, Ohio and Tennessee. HHS says: “States may apply for a waiver of the restricted annual limits on behalf of issuers of state-mandated policies if state law required the policies to be offered by the issuers prior to September 23, 2010.”
Elizabeth MacDonald joined FOX Business Network (FBN) as stocks editor in September 2007.
Follow Elizabeth MacDonald on Twitter @LizMacDonaldFOX.