Pete Bryant, a leader of a Maryland-based bricklayers union, faced a difficult decision last year over how to apply the nation's new health care law to his 1,400 members: He could offer them nearly limitless health insurance, as the law demands, or he could try to get around the requirement.
The decision to provide the most comprehensive health coverage available should be a no-brainer, Bryant said. But the cost of providing coverage with virtually no annual cap on payouts — which government regulators acknowledge can raise premiums as much as fivefold — would likely reduce the number of construction projects that contractors would be willing to pursue. That could put workers out of a job, leaving them with no health insurance at all.
"It would be wonderful if everyone could be insured without limits," said Bryant, the secretary and treasurer of Bricklayers Local 1 of Maryland, Virginia and the District of Columbia. "But things have to be done in moderation and there have to be limits."
The union appealed to the federal government for a waiver.
Bryant's group is one of 15 Maryland companies and labor unions — employing 10,383 workers — that obtained a waiver to circumvent the initial requirement of the new health care law, a review by The Baltimore Sun shows. The figures do not include dozens of national and regional businesses that have received waivers, such as Cracker Barrel and Pepsi, that are based elsewhere but have employees in the state.
Nationwide, 1,372 companies and unions, representing more than 3 million workers, received exemptions. The numbers continue to climb.
The waivers have drawn criticism in part because President Barack Obama and Democrats in Congress touted the prohibition on insurance companies placing low annual caps on payouts as an immediate benefit of the law. Republican challengers in the 2012 presidential election have been raising the issue on the campaign trail.
Maryland companies that received exemptions this year include the Columbia-based media research firm Arbitron Inc., Rosedale-based Mars Super Markets and a Sykesville firm called Nexion Health that operates nursing homes in other states.
Labor organizations that opted out include District Council 51, a Lanham-based chapter of the International Union of Painters and Allied Trades, and Carpenters Local 491.
"Is there a continued concern from the small-business community regarding this law? There is absolutely," said Ellen Valentino, state director of the National Federation of Independent Business. "It's a concern regarding the cost of implementation."
Before the Affordable Care Act became law in 2010, insurance companies were allowed to set limits on how much they would pay to treat a patient in a given year. Some plans capped payouts at $1 million a year; others, often referred to as "mini-meds," set limits as low as $2,000.
Since 2010, the new law has prohibited annual caps of less than $750,000. By 2014, insurers will be barred from imposing any limit.
But the law allows the U.S. Department of Health and Human Services to grant a one-year waiver from the requirement in cases where raising the cap would cause a "significant increase" in premiums for employees or a decrease in coverage.
The number of waivers granted so far is relatively small, said Steve Larsen, who heads the Center for Consumer Information and Insurance Oversight at Health and Human Services, which administers the process.
"We want people to be able to continue their coverage without experiencing a large increase in premiums," he said. "The waiver process allows for that transition and allows for folks who have these polices now to keep them."
Larsen and other Obama administration officials stress that the waivers are a short-term solution. They say that many employees currently enrolled in mini-med plans will likely wind up buying insurance through state-based exchanges that will start up in 2014. Under that system, users will choose one of several private insurance plans offered in the open market rather than getting coverage through their employer.
But until that system is running, many companies are in a state of limbo.
"We felt we were placed in a dilemma," said Leslie Jackson, a spokeswoman for Diamond Comic Distributors in Timonium. "If we changed the plan to be in full compliance with the requirements of the new health care law, then it would no longer be a lower-cost alternative … and we feared that those folks would more than likely have to drop out."
Diamond, the country's largest distributor of comics, received a waiver for one of its health plans that has 37 enrollees, according to the Department of Health and Human Services. The company offers other, more comprehensive plans as well, Jackson said, but some employees simply prefer the less expensive coverage.
"Losing this option is a concern for the employees using it," Jackson said. "It is the 'law of unintended consequences' where the new health care law takes coverage away from employees who currently have affordable coverage that suits their needs."
Supporters of the federal health care overhaul view the situation differently. DeAnn Friedholm, campaign director for health care reform at Consumers Union, said the law specifically targeted the mini-med plans because they can leave patients — and taxpayers — on the hook for astronomical medical costs if an enrollee has a catastrophic illness.
"It's very important that the public understand that these waivers are necessary not because the health reform coverage that will start in 2014 is too much but because what is currently available to many, many people in America is too limited," she said. "A lot of people have very inadequate insurance coverage."
Most of the Maryland businesses that obtained a waiver, including Arbitron, Mars Super Markets and Nexion Health, declined to comment or did not return phone calls.
"We really don't have much to say," said Brian Lee, an attorney for Nexion. "We don't really have any insights to share."
The conservative website The Daily Caller noted this year that about 20 percent of the most recent series of waivers approved went to businesses in the congressional district of House Minority Leader Nancy Pelosi, a California Democrat, who helped shepherd the health care overhaul through Congress last year when she was speaker.
Former Minnesota Gov. Tim Pawlenty, who has announced his candidacy for the GOP nomination, and former Alaska Gov. Sarah Palin, who appears to be flirting with a run, said the waivers smacked of cronyism.
Conservative groups, including Crossroads GPS, which was founded by Republican former White House adviser Karl Rove, have noted that hundreds of unions, which tend to support Democratic candidates for office, have received waivers. The group sued the Obama administration this year in federal court in an attempt to get more information about the criteria used to evaluate waiver applications.
But businesses — including large corporations that tended to oppose the health care law — received more waivers than unions, the data show. During a hearing before the House Committee on Oversight and Government Reform in March, Larsen denied that politics have played a role in the decision making.
"Is political support for the Obama administration or health care reform a factor your office uses in evaluating applications for annual limit waivers?" asked Rep. Elijah E. Cummings of Baltimore, the top-ranking Democrat on the committee.
"It is not," Larsen replied.
"And you understand you're under oath?" Cummings asked.
"I do, sir," Larsen said.
Ron Pollack, executive director of Families USA, a leading supporter of the health care law, described the waivers as a necessary result of two conflicting goals: ensuring that people have adequate health coverage to pay for major illnesses and making sure that the cost of that coverage does not price people out of insurance altogether.
"We would like to get full compliance as quickly as possible," Pollack said. "But another principle is that we don't want to take away coverage that people have today."
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