Health reform waivers granted in Pelosi's district upset conservatives

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CBS

Updated at 4:35 p.m. ET

Right-wing pundits and politicians, including Sarah Palin, are charging that the latest round of health care reform waivers from the Health and Human Services Department (HHS) are"corrupt," since nearly one-fifth went to businesses in House Minority Leader Nancy Pelosi's San Francisco district.

The corruption claims, however, appear to be a stretch at best: More than 90 percent of all waiver requests have been approved by the HHS, and officials explain to Hotsheet that these particular businesses simply applied for a waiver.

Conservatives today have responded angrily to a report from the Daily Caller pointing out that of the 204 waivers the HHS granted in April, waiving certain companies from one specific part of the Affordable Care Act, 38 went to businesses in Pelosi's district -- nearly 20 percent of the total.

Palin told the Daily Caller that the waiver process was "corrupt," while Ed Morrissey at the conservative blog Hot Air called the waivers "political payoffs."

The National Review Online published a column criticizing the waiver program entitled, "Waivers as Weapons." Mona Charen wrote for the NRO that as laws like the Affordable Care Act grant more power to regulatory agencies like HHS, the chances for abuse of power grow.

The waivers granted to these San Francisco area companies, and several others, exempt them the annual coverage limits mandated by the health care reforms passed last year. The waivers typically go to restaurants and other companies that offer "limited-benefit" health plans.

Limited-benefit plans are often used to cover part-time and low-wage employees, and they typically have low premiums and high deductibles. HHS began granting the waivers after insurers threatened to raise premiums dramatically or drop their coverage all together rather than pay for the additional coverage required under the reforms.

In all, 1372 waiver requests have been approved so far, according to the HHS, while just 92 requests have been denied. Several requests came from the San Francisco Bay Area because the region uses a third-party health care administrator called Flex Plan Services. In March, Flex Plan Services submitted waiver requests for 92 of their clients, including 69 in California, 20 in Washington state, two in Georgia and one in Alaska, HHS and congressional offices told Hotsheet.

Steve Larsen, director of the Center for Consumer Information and Insurance Oversight, a division of the HHS, told Hotsheet, "HHS applied the same standard to the application from Flex Plan Services that it uses when reviewing any application for a temporary waiver."

He added that the waivers, which expire after one year, "are necessary to help ensure that the waiters, dishwashers, maids, home health aides, and other hardworking people can keep the health coverage they have, while we transition to 2014, when they will have access to affordable coverage in a competitive marketplace."

Drew Hammill, a spokesperson for Pelosi's office, said that the Democratic leader had nothing to do with the waiver requests or their approval. He added that the waiver process will be elminated in 2014, once the state-based health care exchange system created under the health care reforms is in place.

"It is pathetic that there are those who would be cheering for Americans to lose their minimum health coverage or see their premiums increase for political purposes," Hammill said. "The complaints coming from this crowd that supports ending Medicare is just another example of putting politics first."

Update: Richard Sorian, assistant secretary for public affairs at HHS, published a post on the White House blog this afternoon to address the controversy. He said "there has been no shortage of confusion and deliberate obfuscation on this issue" but said the Obama administration has been "completely transparent" about the process, publishing clear guidance on the application process on the HHS website and posting a list of granted waivers.

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