White House defends granting companies waivers from provisions of new health care law

White House defends waivers from new health law

WASHINGTON — The White House on Thursday defended granting waivers to some employers from a key provision of the new health care law, saying it was the best way to keep people insured until the law fully takes effect.

At issue is a new requirement banning annual caps on benefits, which began phasing in last month. Many employers and insurers that offer low-cost, low-benefit insurance plans known as “mini-med” plans would not have been able to comply with the new requirement without raising monthly premiums to virtually unaffordable levels.

So the administration has granted 30 waivers to date exempting companies from the requirement for a year.

Waivers went to companies including Jack in the Box, Cigna and the company that insures some McDonald’s workers, and another 114 applications for waivers are under review by the Health and Human Services Department. One waiver request has been denied, but HHS declined to identify which company was involved.

“The waivers are about ensuring and protecting the coverage that people have until there are better options available to them in 2014,” when the health law is fully implemented, White House Press Secretary Robert Gibbs told reporters. “We want to ensure that in the time that it takes to implement the law and to give people better options, that they don’t find themselves at the mercy of an insurance company jacking up their rates. And that’s why those waivers were granted.”

Another issue is a different provision in the law that will require that a specified percentage of health plan expenditures — 80 percent to 85 percent — be spent on medical as opposed to administrative costs. That provision doesn’t take effect until next year, but it got attention last week when the Wall Street Journal reported that McDonald’s had alerted the administration it would not be able to comply. The administration subsequently indicated it would be flexible in applying the regulation.

Both complications arise because of the decision by lawmakers and the White House to trigger certain protections in the legislation before the bulk of the law takes effect. After the contentious debate around the health care bill, policymakers didn’t want the public to wait until 2014 to see any benefit.

Once 2014 rolls around, nearly everyone will be required to carry insurance, and insurance marketplaces called “exchanges” will be established in which individuals will be able to shop for comprehensive insurance plans with government subsidies. Before that transformation takes place, new rules applied to the current system require the government to show flexibility in some cases.