Critics pounce as CMS gives states more leeway to skirt ACA

Tony Abraham@TonyAbraham

Oct. 23, 2018

Dive Brief:

• CMS has granted states what it calls new "flexibility" in using Medicaid 1332 waivers that it says encourages states to leverage associated and short-term limited duration health plans, which can exclude people with pre-existing conditions.  
• The new guidance, which went into effect Monday, also gives governors broader power by allowing them to submit waivers without state legislature approval. Prior to this guidance, only eight waivers had been approved by CMS. Now, the criteria for approval will not be as stringent and rely less on people maintaining coverage.  
• Separately, the Labor and Treasury departments and HHS released a proposed rule Tuesday that would allow employees to use tax-free health reimbursement arrangements to shop in the individual market. The proposed rule would also allow employers to fund an HRA of up to $1,800 a year to pay for medical benefits. 

Dive Insight

While the new guidance for waivers doesn't require states to use Affordable Care Act-exempt short term and associated health plans, the administration is certainly encouraging it.

CMS outlined five principles for states to follow in developing new approaches to waivers, including increased access to private market coverage, encouraging sustainable spending growth, fostering innovation and promoting consumer-driven healthcare. 

"States know much better than the federal government how their markets work," Verma said in the press release regarding the new guidance. "With today's announcement, we are making sure that they have the ability to adopt innovative strategies to reduce costs for Americans, while providing higher quality options."

What CMS called flexibility, critics call another way to encourage cheap insurance that doesn't work for those with pre-existing conditions, a topic that has taken center stage two weeks before the midterm elections.

Although Republicans have tried to repeal the ACA for years, they've tried to carve out what they say is support for coverage of those with pre-existing conditions.

Former CMS administrator Andy Slavitt took to Twitter to weigh in. 

Andy Slavitt

✔@ASlavitt

Oct 22, 2018

BREAKING: Trump Administration releases new rule to allow states to add plans which don’t cover pre-existing conditions.

2 week’s before an election in which GOP is claiming this isn’t really their strategy.

Andy Slavitt

✔@ASlavitt

Effective today, “insurance” that doesn’t include coverage for the following events will be eligible to count towards insurance— *and get subsidies that currently go to the ACA.

States need to apply for a waiver that the Trump Admin is allowing as of today. 2/ pic.twitter.com/wgdGwufte6

2:39 PM - Oct 22, 2018

"Republicans are once again undermining protections for people with pre-existing conditions and sabotaging our health care system," Democratic Senate Majority Leader Chuck Schumer said in a statement. 

The administration rolled out STLD health plan expansion earlier this year, extending their availability to a year and allowing enrollees to re-up for as many as three years. The plans, however, are limited in coverage and can be lucrative for insurers.

A Kaiser Family Foundation report published earlier this year found that the expansion of short-term plans, combined with the elimination of the individual mandate penalty, could negatively impact people who need behavioral health services, substance misuse treatment or maternity care. None of those services are typically covered under STLD health plans. 

Verma told reporters CMS will be releasing "waiver concepts" to help states craft new waiver ideas with the "unprecedented flexibility" the agency is now allowing them.

https://www.healthcaredive.com/news/critics-pounce-as-cms-gives-states-more-leeway-to-skirt-aca/540288/