Obamacare waivers weren’t in original law, appearance of political favors persists

Matthew Boyle Investigative Reporter
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The Daily Caller has learned the Department of Health and Human Services (HHS) never had the authority to issue waivers from Obamacare’s annual limit requirements.

Language granting HHS that power was never in the original law. Instead, through new rules and regulations, HHS gave itself the power last summer using a broad interpretation of certain parts of the law.

The annual limit requirement waivers exempt recipients for one year from having to increase the amount of health care coverage they provide their workers. Each year between now and 2014, the minimum annual limit rises to a new, higher amount. Though the waivers are only for one year, recipients can reapply and be re-approved every year through 2014.

Heritage Foundation health policy expert Edmund Haislmaier said HHS “exceeded its statutory authority” by issuing such waivers.

“The first problem is that it appears HHS has exceeded its statutory authority in creating this waiver process,” Haislmaier said in testimony before the House Oversight Committee’s subcommittee on Health Care. “The statute does not explicitly grant HHS authority to waive the application of this provision. In contrast, I count twenty-one other sections of PPACA [Patient Protection and Affordable Care Act] in which Congress did grant HHS explicit, new waiver authority with respect to specific provisions. Thus, it is reasonable to presume that if Congress had intended the department to institute a waiver process as part of its implementation of this particular provision, Congress would have said so in the statute.”

The Obama administration, which touts itself as the most transparent in American history, hasn’t answered many questions about who’s been getting waivers and why, who’s been denied and why or who’s still in line. Seeing as the administration hasn’t complied with many Freedom of Information Act (FOIA) requests for information surrounding Obamacare, former George W. Bush adviser Karl Rove’s Crossroads GPS announced Monday it will seek summary judgment in federal court against HHS over “the agency’s failure to disclose materials concerning Obamacare waivers.” Crossroads GPS filed a FOIA request back in January for information regarding Obamacare waivers. After two months of inactivity on the request, Crossroads filed a lawsuit alleging HHS isn’t following FOIA standards.

In what’s become a bit of a pattern for the Obama administration, there’s at least an appearance of political favoritism in favor of those who lobbied for HHS to grant itself waiver power. Many of the administration’s nearly 1,400 waivers, including the waivers that went to House Minority Leader Nancy Pelosi’s San Francisco district in April, went to companies and entities that lobbied their support behind HHS’s drive to grant itself that power.

Flex-Plan Services co-owner Hilarie Aitken, who admitted openly she applied for all those Pelosi-district waivers in addition to a few others nationwide, sits on the board of the Employers Council on Flexible Compensation (ECFC). ECFC is a Washington trade group that lobbies to “represent and promote flexible compensation programs.” The group lobbied the HHS give itself annual limit waiver power through a rule making process.

As part of that rule making process, HHS has to provide citizens and industry groups a forum to offer public comment. ECFC was one of several organizations now somewhat benefiting from waivers that offered express written support of the administration’s plans to exempt certain plans from Obamacare’s annual limit provisions. The group tends to be apolitical, but ran a campaign during the debate before Obamacare’s passage calling for special protections for Flexible Spending Accounts, or FSAs, like the ones Aitken’s company provides for clients.

When it came to the Pelosi-district Obamacare waivers, Aitken denies any coordination with Pelosi’s office, and Pelosi’s office concurs. Aitken said she learned about the Obamacare waivers through her ECFC board position. She told TheDC she considers them a regular part of business, adding that “we didn’t think it was that big of a deal, applying for a waiver.”

“We just did it to keep our plans in compliance,” Aitken said. “Quite frankly, it wasn’t that big of a deal. We were just applying for a waiver so our clients could keep their plans.”

ECFC’s exact level of influence in getting HHS to pass the rule that gave Secretary Kathleen Sebelius the power to issue waivers from the annual limit requirements of Obamacare isn’t clear, but the organization offered its unrelenting support for the issuance of waivers in an August 27, 2010 letter to HHS. In fact, ECFC asked HHS to exempt HRAs from Obamacare’s annual limits after 2014, which the new law specifically prohibits.

In their letter, ECFC wrote that “HRAs are a valuable tool for employers and employees that should be exempt from the annual limit prohibition,” adding that “ECFC and its members are particularly interested in the interim final rule’s effect on the availability of health reimbursement arrangements (HRAs) and is pleased that the agencies specifically requested input on that subject. HRAs have long been an important health benefit option for employers, employees and their dependents.”

ECFC added that, without exemptions or waivers from the annual limit requirements, HRAs would likely cease to exist post-2014.

ECFC is hardly the only entity getting some benefit from Obamacare rules and regulations after it expressed public support for the administration’s decisions. Groups like the United Food and Commercial Workers (UFCW) union, labor union-favored law firm Spivak Lipton LLP and American Association of Retired Persons (AARP) all wrote HHS expressing their support for an Obamacare annual limit waiver system.

UFCW directly asked the administration to waive the annual limits requirements for all “collectively bargained health care coverage,” up until 2014.

“UFCW requests that the Proposed Rules recognize that collectively bargained health care coverage, in whatever form such coverage is provided, should not be required to increase their current annual limits during the transition period to 2014,” Edward Wendell, UFCW’s general counsel, wrote to HHS on August 27, 2010. “In the least, individual waivers from the annual limit requirements should be granted to a plan upon documentation that it provides coverage through a collective bargaining agreement.”

Spivak Lipton’s case for waiving certain health care plans from Obamacare’s one-size-fits-all annual limit requirements hinged on the fact that many of their clients offer insurance benefits that supplement what their employers already give them. After describing one of its client’s “supplemental funds” as a plan that “operates similarly to” an (HRA), Lipton pointed out that if HHS didn’t waive Obamacare’s annual limit requirements for its client, it would result in the “fund ceasing to offer the benefit at all,” because the new regulations would be too burdensome to make a difference.