Health Care Waivers For Everyone!

OK, so not everyone is getting a waiver to opt out from one of the new health care law's requirements. But perhaps everyone should. Already the Department of Health and Human Services seems to have decided that, at least in the reasonably near future, waivers will be handed out generously to unions, businesses, and state governments alike. Last week, Maine became the first state to officially receive an exemption from the law's medical loss ratio provision, which requires insurers to spend a minimum percentage of premium revenue on government-defined "clinical services." HHS has also approved waivers for more than 1,000 businesses and unions—covering a total of about 2.6 million individuals—in order to prevent those employers from dropping health coverage for their employees.

Maybe this suggests that there are problems with the law? Politico has the administration's response:

"When you make changes to the health care system, there are some changes you cannot make immediately," said Steve Larsen, director of HHS's Center for Consumer Information and Insurance Oversight. "The ACA identified a couple important areas where flexibility is needed to achieve the ultimate goal.

"To the contrary of what critics are saying, you'd be hearing that the law doesn't work [if we didn't issue these waivers]," he added.

I'll give Larsen this: He's right that critics would be arguing that the law didn't work even if HHS was not passing out waivers like handfuls of candy at a Christmas parade. That's because it's fairly obvious that, well, certain provisions in the law aren't working—and it would still be obvious whether or not the administration was granting waivers in response.

But the waivers still matter because they serve as an all-but-explicit admission by the administration that some parts of the health care overhaul aren't working. Unions and other employers got waivers in order to prevent individuals from losing their existing health insurance coverage; Maine got out of the law's insurance spending rules explicitly because officials were worried that those rules would destabilize the state's health insurance market (other state waivers are expected to follow). By issuing the waivers, the administration is publicly acknowledging that 1) parts of the law are causing problems in the health insurance market and 2) the problems are severe enough that enforcement of parts of the law should be temporarily suspended, at least in some cases. The message of the waivers, then, is that the law is broken and needs to be fixed.

Now, I'm all for chucking parts of the law and providing flexibility to both employers and state governments. But as I've noted before, the waiver-granting process is not transparent or well defined. That creates uncertainty headaches for applicants and sets up a situation in which it's potentially very easy for the administration to play favorites. It's also inherently unfair to enforce the rules so differently from businesses to business, state to state—especially when the process is so opaque.

So here's a suggestion: Rather than force employers and state governments to play along with the administration's waiver-granting carnival game, why not just ditch—or at least suspend—those provisions entirely? HHS has already admitted, for all practical purposes, that parts of the law simply aren't working. The muddled waiver process is merely a way of preserving the agency's discretionary power—and the fiction that ObamaCare isn't broken.