Wielding Waivers as Weapons

Wielding Waivers as Weapons
By Mona Charen
5/17/2011

Former House Speaker Nancy Pelosi's plea that Congress would have to pass the 906-page Patient Protection and Affordable Care Act in order to "find out what's in it" has become an instant classic in the annals of dysfunctional government. But in the months since the bill's passage, as the Department of Health and Human Services has parceled out waivers, something else has become clear: We may never know what's in it.

It's not because the legislation is so long or so complicated -- though it is staggeringly prolix and stupefying in complexity. If it were only that, time would reveal the intricacies and experts would parse the meaning.

No, the reason we may never really know what's in it is because it lodges such tremendous discretion and power in the Department of Health and Human Services that we can never really be sure how government decision-makers will interpret it. In at least 700 separate instances, the legislation says that the Secretary of Health and Human Services "shall have discretion" to make rules implementing the law's often vague requirements.

On May 13, the Obama administration announced the approval of 204 new waivers from compliance with the PPAA (Obamacare). That brings to 1,372 the number of waivers HHS has granted in the 14 months since the law's passage. The waivers are temporary, designed to prevent wholesale bankruptcies of insurance and other companies before most of the law's provisions take full effect in 2014.

"We are committed to making the waiver process transparent to the public," an HHS spokesman offered reassuringly.

But while the identities of those who have received waivers have been disclosed, the administration has so far declined to reveal the names of those whose waiver requests were denied. Nor has HHS explained its criteria.

There are rumblings of suspicion that HHS has shown favoritism -- labor unions have received some 26 percent of waivers while comprising only 12 percent of workers. As Rep. Fred Upton, R-Mich., chairman of the Energy and Commerce Committee remarked, "What does it say about the feasibility of the health care law when the administration needs to exempt over 1,000 health plans from its own law?"

A few wags have suggested that the HHS grant the rest of the country a waiver and be done with it. But the implications of what Professor Richard Epstein has called "government by waiver" aren't funny. As Congress has ceded more and more power to regulatory agencies, the opportunities for abuse of power multiply. Writing in National Affairs, Epstein notes that among the companies and entities that successfully sought waivers from Obamacare's provisions were PepsiCo, Foot Locker, the Pew Charitable Trusts, many local chapters of the Teamsters, the United Food and Commercial Workers union, and numerous public-employee unions.

But, asks Epstein, "(W)hat about employers who do not have the resources to navigate the waiver process? What about those lacking the political connections to make their concerns heard in Washington? And what happens when the one-year waivers run out? Will they be renewed? Under what conditions? And what rights will insurers have to waive then in order to avoid going out of business?"

The world of Obamacare is no place for the little guy.

The danger of waiver power is that it will be used differentially, giving one private entity a competitive advantage over another. The company denied a waiver can bring suit -- but litigation is expensive and slow.

Additionally, companies may fear government retaliation: "It is no accident that it is often public-interest groups or patient groups that take on the FDA, for instance. It is simply too risky for a pharmaceutical company with multiple applications before the agency to challenge one action if it is vulnerable to a government-induced slowdown on another," writes Epstein.

Nor have the courts been particularly solicitous of those who challenge the regulatory state. Epstein observes with regret that "Most judges evince great faith in the administrative state, so that the abuse of discretion that lies at the heart of the waiver problem is, to them, a matter best sorted out by administrative expertise -- a perpetually overestimated pool of wisdom."

Because there are so few avenues of recourse when we live under a government by waiver, we are forced, as Epstein warns, to trust in the good judgment of bureaucrats and elected officials: "The fate of our rights and liberties is left to the wisdom and discretion of individuals; we are therefore governed by men, not by laws."

In Marbury v. Madison, Justice Marshall wrote: "The government of the United States has been emphatically termed a government of laws, and not of men. It will certainly cease to deserve this high appellation if the laws furnish no remedy for the violation of a vested legal right." It will also cease to deserve that "high appellation" if we submit to the unreviewable discretion of agencies.
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To read another article by Mona Charen, click here.