Regulation

ObamaCare's Opaque Waiver Process

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There's been a lot of speculation about the many ways that last year's health care overhaul might break down. The Medicare cuts might not be sustainable; the Cadillac tax might further delayed or canceled; the Independent Payment Advisory Board might not achieve the savings the law's authors hoped for; etc., etc.

But in fact, we already know that some provision within the Patient Protection and Affordable Care Act won't—indeed, don't—work as written, at least in some specific instances. The Obama administration has implicitly admitted that some sections are flawed and unworkable by issuing at least 222 waivers allowing certain companies and unions to get out of some of the law's requirements on a temporary basis. You can portray the waivers as a way for the administration to offer some regulatory flexibility, but they carry a clear subtext: The law, as written, expects too much. The requirements, at least for now, are too great.

At the same time, the waivers also potentially give the administration some flexibility of their own—flexibility to play favorites, that is. That's because the process involved in obtaining a waiver is as clear as mud. As Hoover Institution research fellow (and Reason contributor) David R. Henderson explained in an NCPA brief last October, "the petitioning process is ill-defined, and there is no legal standard at all for granting the waivers themselves. Asking for such waivers is a crapshoot, dependent on the whims of bureaucrats."

The lack of a transparent standard presents a dual problem. It makes it even tougher for those companies who want waivers to determine whether or not they'll qualify. It also potentially politicizes the process, as the waivers could easily be used to reward friends, pick favorites, and alter the competitive equilibrium within certain industries. The administration would no doubt deny such a charge. But of course without clear definitions, it would be difficult to prove otherwise.