NHD

Looking over the landscape of HCR and trying to decide on my top “implementation highlight” for this month, there’s one April development that promises to become quite an HCR story over the next 30 days. I’m referring to the growing hubbub surrounding the granting of HHS hundreds of “waivers” for the so called “mini med” insurance plans. This situation has become increasingly partisan (surprise!), involves health care coverage for millions, and promises to explode over the basic question of, “Can the government tell you what level of care you must provide your employees or group members?” And, so, “mini meds” get my nod for key HCR development of the month…

To make sure we’re all on the same page, let’s quickly review the concept of an HHS “waiver.” Waivers are used by HHS in “unusual” circumstances, frequently associated with the rules they generate after a law is passed. Most of the time they are granted to entities that, somehow, fall out of the scope of the rule, or allege they will be unfairly harmed by implementing the rule. Usually the entity is give a phase in time to get into compliance, or else, leave the service area that is subject to the new HHS rule. Seems fair enough…

That said, instinctively, granting someone a “waiver” that absolves them from the mandates of an oncoming law…like the new HCR law… sounds like, well, someone is getting “preferential” treatment. Those receiving the “waiver” don’t have to do what everyone else must do under this new law…and in this country, usually that’s a formula for trouble — In this case, it definitely is.

On the other hand, since the HCR law is so comprehensive and so new, there may be legitimate reasons to grant operational waivers, especially if certain HCR mandates are negatively impacting the delivery of current healthcare coverage. Indeed, HHS claims this authority is part of the mandate they were granted under the new law, even as Republicans argue that it is not. http://tinyurl.com/63sd5jz

Given this dichotomy in what people think is going on here, taking a few minutes to give this whole “mini med” waiver situation a good look, makes sense…

Here’s how this lays out: HHS as the administrator of the 2008 HCR law is the grantor of these waivers. Who is asking for the waivers? So far, it’s been an eclectic bunch that have requested this action — unions, self insured companies, health insurers, retailers, and even a few state governments. http://tinyurl.com/5u993em

To date, over 1,040 waivers have been granted….Not a small number, and that certainly is the main reason why interest in this issue has spiked lately.

So, why are these entities seeking the waivers? Well, all of these groups have one thing in common. They are all providing health insurance to either employees or their members in the form of a very specific type of health insurance called “mini-meds.” What are these? “Mini med” insurance offerings provide very limited medical coverage, very high copays, restricted usage limits, and frequently cover only catastrophic incidents. The insured person is responsible for most other medical expenses. What do the various “mini meds” have in common? They are all very cheap which is, of course, why those entities paying for coverage are drawn to them. Large, low wage employers, (Think McDonald’s) in particular, use the concept. At the same time, several sizeable unions also offer “mini meds”, especially those unions with many younger members who don’t seek comprehensive medical coverage (Think American Federation of Musicians). http://tinyurl.com/6jshlmb

So what’s HHS’s problem with the “mini meds”? The problem is that the new HCR law effectively mandates that “mini-med” plans will be gone by 2014. The law states that by that year, Americans must be able to access affordable, comprehensive health insurance plans that do not utilize high deductibles or annual dollar caps that limit benefits. In short, whatever medical coverage your new HCR health insurance provides, you will be able to access that medical care, essentially, without a service or cost limitation. http://tinyurl.com/4nhgak2

In the meantime, and this is really why I am drawn to this issue as HCR Monthly’s April development of the month, the law requires insurers to phase out the use of annual benefit limits heading toward 2014. Under the current 2011 “phase in” mandate, employers must buy insurance that imposes an annual benefit limit of no less than $750,000. But guess what? As stated, to date, 1,040 of the “mini med” providing entities…Including McDonalds, Jack in the Box, Red Lobster, Olive Garden, several unions, The State of Massachusetts Younger Adult program (under 26), small cities, retailers, etc., http://tinyurl.com/4rcnauz have said, “We can’t do this” and, so, they sought implementation waivers on the “phase in” for 2011. And all who sought them, except 4% according to Sec. Sebelius, got them. http://tinyurl.com/4ur3e86

It’s worth noting that as I write this, approximately 2.1 million Americans are now receiving health care under these HHS “mini med” waivers for this year. http://tinyurl.com/4pklrjs

All well and good, but how did this “mini med” issue become so controversial? Think of it this way: If you were one of the entities that could not meet the benefit levels for 2011, what would you do? For most “mini med” entities that could not meet the 2011 “phase in” benefit limit, the obvious answer was move to cancel their existing “mini med” plans and avoid the various HCR penalties associated with the not meeting the “phase in” requirements. And, in fact, as 2010 was closing out, a large number of these non-compliant entities actively considered doing just that. Oops!

When that reality took hold in Washington late last year, it’s not hard to visualize what happened. HHS started issuing dozens of “mini med” waivers, left & right. Why? Because Secretary Sebelius and the Obama Administration would look bad if 2.1 million people who currently had “mini med” coverage all of a sudden lost it completely. The mantra about “Helping Americans Keep the Coverage They Have” comes to mind. http://tinyurl.com/39pubvx This would have been very big news, indeed.

So, the folks on the Right, of course, started hammering HHS for not “foreseeing” this one coming down the HCR line. And now, they’re using this as a wedge to suggest that if this occurred on the “mini med” issue, it is likely just the beginning of a myriad of unforeseen, unplanned consequences that will eventually foul up the entire provision of health care in the country…Pretty strong stuff.

On the other hand, the official HHS explanation of this matter is that, “In order to avoid disruption in the insurance market, HCR gives HHS the power to grant waivers that cannot meet new annual coverage limits in 2011.” That is, “We have this well in hand. Stop asking about it.” Right… http://tinyurl.com/4jqx3ck

And, you would have to guess, at this point, HHS really does not want to grant any more “mini med” waivers for 2011. The controversy surrounding the issue has become too hot, and it’s now clearly a distraction to the greater urgencies of HCR implementation. No doubt they would like this entire episode to just fade away. But that’s not going to happen. Crossroads GPS, Karl Rove’s conservative group, has just filed a law suit demanding more information on how HHS reviewed the waiver requests and, ultimately, how HHS decided who should get the waivers, and who should not. Rove’s contention? The waivers were granted based on political considerations. Oh boy… The whole deal is now supercharged. It means this issue is not going to go away any time soon. Why? Both sides now have too much to potentially win; or too much to potentially lose. http://tinyurl.com/4hpduzh

So let’s conclude this “mini med” review with one final thought…To me, the biggest, most tantalizing question surrounding all of this 2011 “mini med” waivers action is… If the 1,040 currently waived entities, covering 2.1 million lives, were not able to expand their annual medical spending limits to satisfy HCR’s “phase in” rules for 2011, what are they going to do to increase their spending limit caps to satisfy…the $1.25 million “phase in” amounts for 2012?…Or the $2 million amounts for 2013? Will these waivered entities spend more on insurance premiums to reach the limits and then pass the costs on to their employees? Or will they just go back to idea of cancelling their health insurance offering all together? Or maybe HHS will use its other new power, the “grandfather,” and opt these 1,040 entities out from under HCR’s provisions, almost entirely… http://tinyurl.com/4ppf8gv Gotta say, none of these would seem to be great political outcomes for HHS or the President.

Which takes us back to the beginning of this conversation: How fair is it that some groups may not have to follow the mandates of the HCR law– that all others are being forced to accept?

To me this entire episode is indicative of the nasty, hand-to-hand fighting that is going to occur from now on with virtually every controversial aspect of HCR’s implementation, which will be most of them. And this is not going to slow down. If anything, given HHS’s increasing pace of implementation, I look for these kinds of confrontations to occur regularly. Exactly how all of these running battles, like the “Mini Meds” situation, are improving American healthcare…is beyond me. That’s my view. I’d be interested in yours.

Tom Norton