Republican lawmakers are asking whether the Obama administration should be making so much use of Affordable Care Act waivers.

Rep. Trey Gowdy, R-S.C.., the chairman of the health care subcommittee at the House Oversight and Government Reform Committee, organized the hearing to look at waivers giving states the ability to adjust new medical loss ratio (MLR) standards, which require health insurers to spend 85% of large group revenue and 80% of individual and small group revenue on health care and quality improvement efforts.

Maine recently received an MLR waiver.

The subcommittee also looked at efforts to grant employers with limited benefit health plans waivers from the usual Affordable Care Act restrictions on health plan annual benefits.

The Center for Consumer Information and Insurance Oversight (CCIIO), the arm of the U.S. Department of Health and Human Services (HHS) responsible for administering the waiver program, has granted about 1,000 waivers.

The CCIIO announced the rules for the waiver program in September 2010.

Gowdy called the annual benefits limit waiver process “amorphous” and “shrouded in ambiguity.”

“The entire waivers process is predicated on the ability of the [HHS] secretary to grant waivers in the first place,” Gowdy said in his opening statement, according to a written version provided by the committee. “However this seemingly fundamental step – the statutory basis for waiving compliance with the law – appears to have been wholly neglected by the plain language of the statute. What is the legal authority by which the secretary can grant waivers? Where in the health care law does it specifically grant the secretary the authority to waive compliance with the law?”

Steve Larsen, the CCIIO director, said the Patient Protection and Affordable Care Act (PPACA), a component of the Affordable Care Act, includes a provision explicitly giving the HHS secretary the authority to adjust the MLR requirements to keep the requirements from destabilizing a state’s individual health insurance market.

The statute also directs the HHS secretary to “define ‘restricted annual limit’ during the interim period in a way that will ‘ensure that access to needed services is made available with a minimal impact on premiums,’” Larsen said. “This statutory directive

recognizes that, for some health plans, an immediate transition to high or no annual limits could significantly raise premiums or reduce coverage with adverse consequences.”

The annual benefits limits would have been especially hard on limited benefit plans, Larsen said.

CCIIO officials have approved about 94% of the annual limit waiver, and about 95% of the waivers went to job-related plans, Larsen said.

Edmund Haislmaier, a senior research fellow at the Heritage Foundation, Washington, said he believes HHS officials have exceeded their statutory authority in developing the waiver process.

More than 20 other PPACA sections explicitly give the HHS secretary flexibility, but the annual limit section does not, Haislmaier said.

The waiver program “results in unequal application of the law to affected parties and creates unequal burdens,” Haislmaier said. “Some applicants may get waivers while others may not…. It creates at least the perception — and possibly the fact — that regulatory enforcement is being subordinated to [Obama] administration political priorities or concerns.”

More PPACA waiver coverage from National Underwriter Life & Health:

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CORRECTION: Rep. Trey Gowdy’s state was identified incorrectly in an earlier version of this article. He represents a district in South Carolina.