AP's Alonso-Zaldivar Inadvertently Proves Political Nature of Obamacare Waivers

June 6th, 2011 3:33 PM

In late January (at NewsBusters; at BizzyBlog), I noted how the Associated Press and the New York Times had been studiously avoiding covering the Obamacare waivers granted by Kathleen Sebelius's Department of Health and Human Services (HHS).

Though I can't verify that the AP has ignored the issue since, it doesn't seem to have been a prominently covered item until today, when wire service reporter Ricardo Alonso-Zaldivar ("Health care law waivers stir suspicion of favors") unsurprisingly weighed in for the defense.

In doing so, the AP reporter failed to note that the waiver process's arbitrary nature, which leaves plans at the tender mercies of HHS, is troubling even if the evidence of favoritism is not yet convincing (arbitrariness can also involve poor judgment even if politics aren't involved). He also failed to address those who contend that if Obamacare is such a good thing, why are companies and other entities having to scramble to avoid it? Finally, he failed to tell readers if any waiver requests have been turned down, and if so why.

Here are excerpts from Alonso-Zaldivar's report. Get a load of his third paragraph, where he dreams up excuses, and the final excerpted paragraph, where he all but admits that waivers in general are being granted for a very important political reason -- to prevent embarrassing Obama and the Democratic Party (bolds and numbered tags are mine):

Call it the Department of Waivers and Adjustments. It's doing a brisk business with the new health care law.


President Barack Obama's administration has granted nearly 1,400 waivers easing requirements of the new health care law, and some critics on the right say Obama is giving his political allies a pass from burdensome requirements everyone else will have to live with.


But what if the waivers work more like a safety valve? What if during the transition to a new system they can prevent unintended consequences - such as people with bare-bones insurance losing their current coverage, or insurers closing shop in a particular state? [1]


... The waivers mainly address two provisions. And they are time-limited.


One is a regulation that says insurance plans can't impose a per-patient limit of less than $750,000 this year for medical care, including hospital stays, doctor visits and medications.


So far, about 1,400 annual limit waivers have been issued, an approval rate of more than 90 percent. They cover plans that serve about 3 million people, or 2 percent of those with private insurance.


The other provision is a requirement that insurance companies spend at least 80 percent of the premiums they collect on medical care and quality, as distinct from overhead and profits.


Three states - Maine, New Hampshire and Nevada - have gotten what the administration calls "adjustments" to the 80-percent standard. Insurers in those states will be held to a lower requirement, say, 65 percent. [2]


... Without waivers, several million people would be at risk of losing their coverage.


If that happened, Obama and the Democrats would really have some explaining to do, since the law is meant to expand coverage, not add to the 50 million uninsured. [3] [4]


  • [1] -- If the requirements are really onerous now, why should anyone think they won't still be onerous in two or three years, especially if the Obama economy continues to meander along in mediocrity -- or gets worse?
  • [2] -- The AP reporter does not seem to grasp the draconian nature of the 80% requirement. If 35% of each premium dollar goes to overhead and profits in a presumably competitive environment, cutting it to 20% (100% minus 80%) would involve a 43% reduction in those items (15% difference divided by 35%). What if nobody except the very largest insurers can do this? If I didn't know better, this requirement alone could lead to the creation of yet another bunch of "too big to fail" entities -- as if we need any more. Maybe this is part of the plan.
  • [3] -- The idea that there are currently at this very moment 50 million uninsured American citizens has been debunked so often that it should be deemed an urban legend by now. Julia Seymour at the Business and Media Institute gave the stat a comprehensive refutation in 2007 (the number at any point in time is really about 20 million, and somewhere between 30%-60% of those who remain are uninsured by choice). Sadly, the useful myth endures; its persistence largely explains how statist health care became law even though its alleged primary objective (obviously the real objective was government control) -- insuring those who legitimately can't afford coverage --involved less than 4% of the population.
  • [4] -- Alonso-Zaldivar is apparently blissfully  unaware that the final excerpted paragraph proves critics' point that waiver decisions, which currently happen to be permissive, are nonetheless being made for a specific political reason. Once safely reelected (they hope), it seems reasonable to believe that Sebelius and HHS will exhibit a lot less regulatory indulgence and engage in a lot more aggressive enforcement.

Finally, no AP report on health care would be complete with a reference to a supposedly "nonpartisan" group which is actually a collection of liberals, in this case a bunch of statist health care fans. Alonso-Zaldivar quotes Paul Ginsburg, president of the Center for Studying Health System Change, "a nonpartisan research organization," as saying that the Obamacare waivers aren't "special deals as much as bowing to reality." Yeah, "political reality."

A cursory review of the Advisory Committee at the organization, which calls itself HSC ("Health System Change") has an Advisory Committee which includes officials from the Obamacare-advocating Robert Wood Johnson Foundation, Families USA, and AARP, as well as a longtime Democratic aide who has worked with or for Ted Kennedy, Tom Daschle, Charlie Rangel, and Pete Stark. Nonpartisan, nonschmartisan, Ricardo.

Cross-posted at BizzyBlog.com.