Obama administration wins plaudits from healthcare law critics

As President Obama gears up his reelection campaign, his administration is laboring to soften the impact of last year’s sweeping healthcare law in a bid to prevent further political backlash.

The campaign to minimize disruptions — by easing requirements for insurers, employers, doctors and others — is winning cautious praise from some of the toughest critics of the law in the business community.

“Our members have generally been surprised and pleased by the lengths to which the administration has gone to answer our concerns,” said Neil Trautwein, vice president of the National Retail Federation, who was a leading opponent of the law.

But the administration’s careful strategy — which has marked its approach to other hot-button issues such as smog regulation and emergency contraceptives for teenage girls — is stoking frustration among Obama’s allies.

Many consumer and patient advocates who championed the law had hoped the administration would use its new powers more aggressively to remake the nation’s healthcare system.

“We are very concerned,” said Stephen Finan, senior policy director at the American Cancer Society’s Cancer Action Network. “If this isn’t done well, it will be a generation or more before we have another opportunity.”

Now, the White House is facing several crucial decisions about the law that threaten to erupt into a battle royal on the eve of the 2012 campaign. One of the most potentially explosive involves which medical benefits insurers will have to offer individuals and small businesses beginning in 2014, a key protection cherished by consumer groups.

Patient advocates have been alarmed by aggressive efforts by employers and insurance companies to persuade the administration to keep the list of required benefits short, to make insurance more affordable.

White House officials defend their implementation of the law, saying that they have moved forcefully to give consumers new protections, including increased government oversight of insurers’ prices. They also point to new mandates barring insurers from denying coverage to sick children, eliminating lifetime limits on coverage and allowing young adults to stay on their parents’ health plans.

At the same time, administration officials have been sensitive to anything that could destabilize the healthcare system by pushing up costs or prompting businesses or insurance companies to stop offering benefits.

The task has taken on added urgency as the presidential campaign heats up and Republican candidates work to capitalize on substantial public suspicion about the law.

“We have consistently worked to hold down premiums and protect existing coverage while implementing important consumer protections that end the worst insurance company abuses,” Health and Human Services Secretary Kathleen Sebelius said, explaining the administration’s approach.

Since the law was signed in March 2010, administration officials have exempted close to 1,500 employers and health plans from rules designed to eliminate so-called mini-med plans that cap coverage at as little as a few thousand dollars a year.

Consumer advocates say these plans offer little protection. But facing the prospect that some employers would eliminate coverage, the administration delayed the mandate that annual limits on coverage be lifted for more than 3 million people.

The administration has helped states where insurance companies said they cannot meet new requirements to spend more of their premium revenue on customers’ medical care.

Federal health officials in the last nine months have given waivers to six states exempting insurers from the requirements, and they are considering waivers for seven more. (The administration rejected waiver requests from four states.)

Under pressure from insurers and employers, the administration this summer also limited customers’ rights to appeal to an independent arbiter when they have been denied medical coverage.

Federal officials said in the final regulation that they wanted “to give the marketplace time to adjust” to new requirements in the law designed to expand customers’ access to an independent review of coverage decisions.

And twice since May, the administration has eased new requirements that medical providers step up their use of electronic health records, a key goal of the overhaul.

“We are making it easier for healthcare providers to use new technology,” Sebelius said recently, explaining a decision to allow physicians and hospitals to get federal aid now without having to meet new technical requirements until 2014.

There are good reasons to proceed carefully, said John Rother, president of the National Coalition on Health Care, a Washington nonprofit group representing businesses, unions and healthcare providers.

“It’s really important to get the law started in the right way,” Rother said, noting that the drive to expand coverage to millions of Americans in two years could collapse if major healthcare players rebel or if prices rise too quickly. “Clearly, the administration is trying to get as many stakeholders as possible to cooperate. That is an unprecedented challenge.”

Many industry leaders have welcomed the administration’s moves. Dr. Steven J. Stack, chairman-elect of the American Medical Assn., called the electronic records decisions “steps in the right direction.”

But as the presidential campaign gets underway, it remains unclear how much credit the White House will get for its flexibility.

The healthcare law remains unpopular with many businesses that object to the “high hassle factor” of new regulations, said Edward C. Fensholt, senior vice president of the Lockton Companies, a leading benefits consulting firm.

And the administration is facing several decisions that will be difficult to finesse. “It’s still early,” said Chip Kahn, president of the Federation of American Hospitals.

Patient groups are already gearing up to fight the administration if it doesn’t require insurers to offer comprehensive coverage to individual consumers and small businesses that will have to buy insurance on new exchanges starting in 2014.

Advocates also worry that the administration is getting ready to bow to pressure from businesses and delay or scale back new requirements that health plans provide consumers with a standard, easy-to-understand form summarizing benefits.

“We are in an environment that is very, very difficult,” said Dr. Gordon Tomaselli, president of the American Heart Assn., a leading proponent of tougher requirements.

noam.levey@latimes.com