Nov. 29, 2018
Dive
Brief:
- 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.
Dive
Insight:
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
Trump administration has filled in details of ACA waiver guidance, illustrating
how states could restructure premium subsidies, including subsidizing lower
premium plans that don’t cover pre-existing conditions. https://www.cms.gov/newsroom/press-releases/cms-administrator-discusses-initiatives-strengthen-health-insurance-markets …
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.
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