CMS offers states more waiver options to skirt ACA requirements
CMS launched four waiver concepts for states on Thursday in what it called a bid to promote more affordability and flexibility in health insurance options.
The new areas for State Relief and Empowerment Waivers, also called section 1332 waivers or state innovation waivers, are account-based subsidies, state-specific premium assistance, adjusted plan options and risk stabilization strategies.
CMS said the options look to "spur innovation, reduce burdens for states with potentially limited policy resources or legislative schedules and illustrate how states might take advantage of new flexibilities." However, critics charge the move may hurt low-income people and promote short-term health plans that offer limited protections.
In D.C. on Thursday, CMS Administrator Seema Verma unveiled the new ways states will be able to skirt elements of the Affordable Care Act to strengthen insurance markets. But the move was met with sharp criticism and allegations that the plan will flood the markets with "junk plans."
"Today, we are saying the states have the power to make the individual markets work through innovative policies that best meet the needs of your citizens. We are returning freedom, authority and innovation to you, state lawmakers. And I believe the results will be better and more Americans will be insured because of it," Verma said at the States and Nation Policy Summit of the American Legislative Exchange Council.
CMS said the plan is to give states more flexibility to test their own programs. Overall, a state would have greater power in determining how subsidies are allocated.
One example is to let states move subsidies into an account that people can use to pay for health insurance premiums or out-of-pocket expenses. This is a similar concept to health savings accounts, health reimbursement arrangements and flexible spending accounts found in employer-sponsored health insurance.
States would also be able to develop their own premium subsidy structure and decide who is awarded those subsidies. States could also decide what type of health insurance is eligible for subsidies, opening the door to subsidizing short-term plans, which aren't required to cover pre-existing conditions.
These waivers free states from being forced into a "one-size-fits-all approach," CMS said in a statement.
Risk stabilization strategies will allow states to pay for high healthcare costs through reinsurance programs and high-risk pools. Reinsurance programs create pools for payers that can help stabilize the marketplace, help pay to insure high-risk people and result in lower premiums. Maryland's reinsurance program will lead to a 13.2% average decrease in individual market premiums in 2019.
HHS Secretary Alex Azar praised the new waivers in a statement: "The specific examples laid out today show how state governments can work with HHS to create more choices and greater flexibility in their health insurance markets, helping to bring down costs and expand access to care."
However, not everyone is pleased with the proposal. Larry Levitt, senior vice president at Kaiser Family Foundation, warned on Twitter that the rules could let states increase subsidies for wealthier people while reducing subsidies for poorer people. It could also allow states to spend premium subsidies on short-term plans that offer fewer consumer protections than an ACA plan.
The new Trump administration rules for ACA waivers give states an enormous amount of leeway to move in the direction of the kind of approaches that Congress considered in the repeal and replace debate last year.— Larry Levitt (@larry_levitt) November 29, 2018
Senate Finance Committee Ranking Member Ron Wyden, D-Ore., bashed the plan in a statement. Wyden said Section 1332 was meant to bring new ideas that improve health, but instead, the new waiver areas will increase consumer costs and lower quality of care.
"The Trump administration has created a fast lane to flood healthcare markets with junk plans and quarantine older Americans and those with pre-existing conditions apart from everyone else," Wyden said. "Trump's sabotage crusade continues to deprive working Americans with the healthcare security they need, and today's news accelerates America's slide back to the days when healthcare was reserved for the healthy and wealthy."
There's also a question to the legality of the proposal. The Brookings Institution in an article this week said the CMS avoided the rule-making processes in issuing guidance on the waivers. Sidestepping that process could make the proposal invalid, according to the think tank.