in Houston, Texas

Businesses seek waivers from health care act and its costs; Texas health commissioner says exemption for state could save $60 billion

Monday, May 23, 2011, 08:55AM CST
By Mark Lisheron
medical supplies

Goodwill Industries of San Antonio runs one of the most successful employment programs for people with severe disabilities in the country. Managers for the AbilityOne program are fiercely protective of the more than 300 people who work for them.

After doing the math and realizing that about 200 of those employees would lose their health insurance because of the Patient Protection and Affordable Care Act, Goodwill Industries applied for and received a waiver from the federal Centers For Medicare & Medicaid Services.

The waiver exempts Goodwill for one year from those portions of the Affordable Care Act that would have added costs that would make health insurance too costly for those employees.

“If our mission is to change lives through the power of work,” Rebecca Helterbrand, a spokeswoman for Goodwill, says, “then it was going to be our goal to do whatever we have to do to maintain the same level of benefits for those working people. For us, getting that waiver was the right thing to do.”

Other Texas companies who have gotten health insurance waivers include Lexus of Austin, South Texas Implement Co. and Tomball Ford.

At the same time, should the state Senate, as is expected, pass House Bill 13, Texas will ask the U.S. Department of Health and Human Services for a much broader and more confrontational waiver. The bill, written by Rep. Lois Kolkhorst, R-Brenham, would exempt the state from the Affordable Care Act, freeing it to reform and recreate a health care system in its own image.

Tom Suehs, executive commissioner for the Texas Department of Health and Human Services, says that such a reform, beginning with a complete overhaul of Medicaid, could save state and federal taxpayers $60 billion over a five-year period. This overhaul, he says, cannot possibly be done by 2014, when most of the requirements of the Affordable Care Act must be met.

Having sat down a couple of weeks ago in Washington with Kathleen Sebelius, his federal counterpart, Suehs says he thinks Texas will get its waiver. Sebelius indicated to Suehs that the Obama administration is beginning to recognize each state’s demographic demands an individual response in its health care system.

Florida, Maine, Nevada, New Jersey, Ohio and Tennessee have been granted waivers in one form or another. Applications for Georgia, Kansas, Kentucky, Louisiana, Oregon and Vermont, are in varying stages of processing.

Tom SuehsSUEHS
“I think they are also beginning to realize, especially in a state our size, that you’re not going to be able to change the whole system of health care in the time frame set out by the Affordable Care Act,” Suehs said. “They are talking two to three years when they should be talking about five to 10 years.”

Both Helterbrand and Suehs recognize that their seeking a way around the Affordable Care Act is not seen in a vacuum of pragmatism. The bill is the pick end of a mineral hammer, cleaving Americans cleanly along conservative and liberal, Republican and Democratic faces.

Texas is one of 27 states joined in a lawsuit to find the act unconstitutional and thrown out. As it makes its way to the Supreme Court, even the political affiliations of the appeals judges have been parsed.

For those who support the bill, the nearly 1,400 various sorts of waivers so far given to states, businesses and labor unions are proof of the flexibility of the Department of Health and Human Services in administering the act. For opponents, the waivers are an indictment of the act itself.

Concerned that the waivers were being granted as favors to political supporters, U.S. Rep. Michael Rogers, R-Mich., in March introduced the Health Care Waiver Fairness Act, to compel Health and Human Services to reveal the criteria for waiver eligibility and to disclose who was turned down for a waiver and why.

Legal scholars like Philip Hamburger at Columbia University are even contending that waivers are unconstitutional, because they are permission to disobey a law granted by an agency without such authority.

“More seriously, it raises questions about whether we live under a government of laws,” Hamburger wrote in a column for National Review Online. “Congress can pass statutes that apply to some businesses and not others, but once a law has passed — and therefore is binding — how can the executive branch relieve some Americans of their obligation to obey it?”
Philip HamburgerHAMBURGER

In an interview with Texas Watchdog, Hamburger called this reaction to the Affordable Care Act “extraordinary,” a throwback to the days of English monarchy to issue decrees and then select those who must or may not follow them.

“A waiver is simply a new version of the old dispensing power -- the power of a ruler to dispense with the obligation of a law for a favored few,” Hamburger says. “Although most Americans do not know the history, many recognize the lawlessness and inequality of a government attempt simply to release selected corporations and unions from the law.

“Either the law is binding or it is not. If some are to be exempt, then all of us should be exempt.”

Count Kolkhorst among those conservatives who think the Affordable Care Act is unconstitutional. Not only a supporter of the Supreme Court challenge, Kolkhorst has successfully shepherded through the House a bill that would give Texas the power to enter in agreements, or compacts, with other states to assume authority for its health care system.

Gov. Rick Perry has from the start opposed the Affordable Care Act and supported a waiver. Perry supports the efforts of U.S. Rep. Paul Ryan, R- Wis., to get the federal government to make its Medicaid payments to states in the form of block grants, his spokeswoman, Katherine Cesinger, says.

Kolkhorst’s waiver bill isn’t simply an expressed desire to be free of the Affordable Care Act, but the outline for Medicaid and broader health care reform tailored to the “demographic, public health, clinical, and cultural needs of this state.”

Included in this reform is incorporating free or private-market ideas into the state programs; introducing co-payments to give participants a stake in their own coverage; promoting health savings accounts and program vouchers.

Health and Human Services needs to begin to untangle and unite individual local, state and federal funding streams that have been added as the federal government incrementally expanded programs like Medicaid, Suehs says.

A waiver will give the state time to develop a system where Medicaid reimbursements would be made to hospitals and doctors based on favorable medical outcomes rather than the number of medical procedures done, he says.

“The Affordable Care Act and waivers are not incompatible,” Suehs says. “But the Affordable Care Act is unthinkable without Medicaid reform, and that is going to take some time.”

Waivers also offer a buffer from the challenges lurking in a 1,000-page bill that few people, including the experts, have mastered. In a state with a population nearing 26 million, 6.5 million Texans are uninsured, Suehs says. How many of those people will be added to the state’s Medicaid rolls and how much that will cost are still relative unknowns.

Many of the entities who applied for a waiver did so not knowing how the act was going to affect their insurance plans. Nursing homes, caught short, are banding together nationwide, paying lobbyists to secure waivers in a profession where one in three people who provide home care, and one in four who work in nursing homes, have no health insurance.

Medicaid and Medicare reimbursement rates currently aren’t enough for nursing home firms to offer medical coverage to employees, according to Mark Parkinson, president of the American Health Care Association, the nation’s largest trade group for nursing homes.

When asked by Texas Watchdog, Beth Martino, senior director of public affairs for the Association said, “AHCA/NCAL (National Center for Assisted Living) supports the Affordable Care Act. But during a time of economic uncertainty, we must continue to pay close attention to anything with financial impacts on the long term care profession as a whole.”

Messages left with Tim Graves, spokesman for the Texas Health Care Association, to speak to the impact of the Affordable Care Act on nursing home employees in the state were not returned.

Unreturned, too, were calls left with more than half a dozen Texas companies who have gotten health insurance waivers. Among them, Lexus of Austin for its 98 employees, South Texas Implement Co. for its 76 employees and for the 12 employees of Tomball Ford.

Goodwill of San Antonio thought it important to explain that its motivation was to make sure a crucial benefit was preserved for a deserving segment of its 474 employees.

The Affordable Care Act would be at cross purposes with another federal program, one that draws $16 million a year in federal funding and makes Goodwill the largest employer of people with severe disabilities in San Antonio, Helterbrand says.

Helterbrand says Goodwill cannot be sure what will happen at the end of the waiver year, but it will apply for another waiver, if necessary, to maintain coverage for their people.

“We don’t know what health care reform will bring in 2014, I don’t think anybody really knows,” she says. “Internally, our goal all along was to maintain our current level of coverage.”

Contact Mark Lisheron at 512-299-2318 or

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Photo of medical supplies by flickr user D'Arcy Norman, used via a Creative Commons license.

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