Iowa and Oklahoma are requesting the CMS give them a section 1332 waiver under the Affordable Care Act (ACA) so they can overhaul the exchanges in their states and create reinsurance programs to help payers with high-cost members.
Iowa hopes to get a quick approval from the federal government. Only one payer is offering to sell ACA exchange plans in the state next year and that insurer, Medica, is proposing a 57% rate increase. Oklahoma also has only one insurer selling ACA plans, Blue Cross Blue Shield of Oklahoma, which was the only ACA insurer in 2017, too.
The CMS has promoted using state innovation waivers to implement state-operated reinsurance programs or high-risk pools, saying they "may be an opportunity for states to lower premiums for consumers, improve market stability and increase consumer choice.” HHS Secretary Tom Price and CMS Administrator Seema Verma are both strong supporters of state-led health policy and regulation.
The waivers Iowa and Oklahoma are pushing aren't as conservative as other recent submissions. They don't change essential health benefits or add eligibility requirements like employment or asset testing. Both Iowa and Oklahoma want to replace the federal insurance exchange with a purchasing platform and change income eligibility for premium subsidies. Oklahoma also wants to change the ACA requirement that insurers can charge older people only three times more than younger people.
The Iowa Insurance Division said the “Iowa Stopgap Measure” is a short-term solution they hope will stabilize the individual health insurance market. “Without the Iowa Stopgap Measure, 20,000 more Iowans will likely be forced to go uninsured due to skyrocketing premium costs under the ACA according to the economic and actuarial analysis,” according to the Iowa Insurance Division.
Iowa and Oklahoma are just two of many states struggling to stabilize their individual markets. Reinsurance programs could help reduce premium increases and entice more payer participation, but insurers say the main roadblock is the federal government's continued lack of commitment to cost-sharing reduction payments.
The waiver requests come after the Republican-led efforts to repeal and replace the ACA fell apart on Capitol Hill. Legislators may still try to pass legislation to stabilize the individual markets when they return from recess, but nothing is assured.
Congress hasn't been able to get a healthcare bill to the president, but states aren't waiting around. Alaska already had its waiver granted, and Minnesota, Iowa and Oklahoma could be next. Expect more states to step forward with their own waiver programs in the coming months as they look for ways to reduce premium increases and cover more expensive members.