Healthcare Reform Exemptions: Solution or Problem?

The anniversary of Obamacare arrives on March 23, 1011. As of this date, the Obama Administration has granted over 1,000 exemptions ( affecting 2.6 Million people) to companies, labor unions and even some states. On the surface, this seems like a generous thing for the administration to do. However, for those companies, labor unions and states who were not granted exemptions and are forced to comply with Obamacare, they have one simple question: Why do we have to comply when you don’t?
Health Care Reform was sold as a way “to bend the cost curve down” and “ if you want to keep your plan, you can keep your plan” and other similar selling points. However, the comments that were made to help pass Obamacare are colliding with the reality of health care and health insurance in the real world.
As an Employee Benefits broker/consultant for over fifteen years, I have delivered some of the largest rate increases in my career over the last several months. Why? Because while most employers will often reduce benefits to help offset a rate increase, Obamacare forces them to enhance coverage by “retrofitting” all plans with all the new mandated provisions of the law.
Today, more and more companies, unions and states are asking for an exemption so that they are not forced to comply with the new law effective in 2011 and up until as late as 2014. One of the mandates of Obamacare requires that annual coverage be increased each year as follows:
• 2011- Offer $750,000 of coverage or more.
• 2012- Offer $1,250,000 of coverage or more.
• 2013- Offer $2,000,000 of coverage or more.
• 2014- Offer unlimited coverage.
Because many employers offer so called “ limited benefit” plans with less than $750,000 of coverage, this has created an issue with compliance of the new law. As a result, many waivers have been granted by the Secretary of Health and Human Services, Kathleen Sebelius.
Another issue is the new medical loss ratio requirement. For small employer coverage and individual coverage, Obamacare requires that health insurers spend at least eighty percent of premium revenues on medical care or efforts to improve it. However, for some states, this change will force some insurers to leave the insurance marketplace altogether. The result: fewer health insurance options and higher prices. Maine was recently granted a three year exemption to the eighty percent medical loss ratio requirement ( insurers in Maine can work under a sixty five percent loss ratio). Now, several other states are requesting exemptions as well ( Florida, Georgia, Kentucky, Nevada and New Hampshire).
Harry Reid, the Senate Majority Leader, recently stated that Health Care Reform had produced “ miracles in the lives of people all over America.” At the same time, however, the state of Nevada is requesting an exemption for Obamacare due to the individual medical loss ratio requirement. Brent J. Barratt, Nevada’s State Insurance Commissioner, said that several insurance carriers were likely to withdraw from Nevada’s individual insurance market if the federal government did not grant such relief.
The administration’s strategy at this point seems to be to grant exemptions as necessary to minimize the negative press leading up to 2014, when the insurance mandate requirement becomes effective. However, between now and then, the Obama Administration may have to answer the following questions:
1. Does the granting of these exemptions violate the equal protection clause of the Constitution?
2. Unions were some of the biggest supporters of Obamacare, and yet they are receiving a disproportionate number of exemptions. Is this fair?
3. If Obamacare is producing “miracles in the lives of people all over America” as Sen. Reid says, why are so many companies, unions and states asking for exemptions?
4. The provisions of Obamacare get more demanding with each year as we approach 2014. Does this mean the number and frequency of exemption requests will increase?
5. If the vast majority of exemptions are being granted, what’s the point of having the legislation in the first place?
Stay tuned. This story is bound to get more interesting…and controversial.