The Centers for Medicare & Medicaid Services (CMS), October 22, 2018
Today, the Centers for Medicare & Medicaid Services (CMS) and the U.S. Department of the Treasury (collectively, the Departments) issued new guidance so states can move their insurance markets away from the one-size-fits-all rules and regulations imposed by the Affordable Care Act (ACA) and increase choice and competition within their insurance markets. The new guidance grants states more flexibility to design alternatives to the ACA and to give Americans more options to get health coverage that better meets their needs. Under this new policy, states will be able to pursue waivers to improve their insurance markets, increase affordable coverage options for their residents, and ensure that people with pre-existing conditions are protected. These waivers are called State Relief and Empowerment Waivers to reflect this new direction and opportunity.
“The Trump Administration inherited a health insurance market with skyrocketing premiums and dwindling choices,” said CMS Administrator Seema Verma. “This is a new day – this is a new approach to empower states to provide relief. States know much better than the federal government how their markets work. 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.”
State Relief and Empowerment Waivers
Federal Register, Scheduled to be published October 24, 2018
Agencies: Centers for Medicare & Medicaid Services (CMS), Department of Health and Human Services; Department of the Treasury
Summary: This guidance relates to section 1332 of the Patient Protection and Affordable Care Act (PPACA) and its implementing regulations. Section 1332 provides the Secretary of Health and Human Services and the Secretary of the Treasury (collectively, the Secretaries) with the discretion to approve a state’s proposal to waive specific provisions of the PPACA (a State Innovation Waiver, now also referred to as a State Relief and Empowerment Waiver), provided the section 1332 state plan meets certain requirements. The Department of Health and Human Services and the Department of the Treasury (collectively, the Departments) finalized implementing regulations on February 27, 2012. This updated guidance provides supplementary information about the requirements that must be met for the approval of a State Innovation Waiver, the Secretaries’ application review procedures, the calculation of pass-through funding, certain analytical requirements, and operational considerations. This guidance supersedes the guidance related to section 1332 of the PPACA that was previously published on December 16, 2015. Changes include increasing flexibility with respect to the manner in which a section 1332 state plan may meet section 1332 standards in order to be eligible to be approved by the Secretaries, clarifying the adjustments the Secretaries may make to maintain federal deficit neutrality, and allowing for states to use existing legislative authority to authorize section 1332 waivers in certain scenarios. The Departments are committed to empowering states to innovate in ways that will strengthen their health insurance markets, expand choices of coverage, target public resources to those most in need, and meet the unique circumstances of each state. This guidance aims to lower barriers to innovation for states seeking to reform their health insurance markets.
From I. Overview
This guidance intends to expand state flexibility, empowering states to address problems with their individual insurance markets and increase coverage options for their residents, while at the same time encouraging states to adopt innovative strategies to reduce future overall health care spending. Section 1332 of the PPACA permits a state to apply for a State Innovation Waiver (referred to as a section 1332 waiver or a State Relief and Empowerment Waiver) to pursue innovative strategies for providing their residents with access to higher value, more affordable health coverage. The overarching goal of section 1332 waivers is to give all Americans the opportunity to gain high value and affordable health coverage regardless of income, geography, age, gender, or health status while empowering states to develop health coverage strategies that best meet the needs of their residents. Section 1332 waivers provide states an opportunity to promote a stable health insurance market that offers more choice and affordability to state residents, in part through expanded competition. These waivers could potentially be used to allow states to build on additional opportunities for more flexible and affordable coverage that the Administration opened through expanded options for Association Health Plans (AHP) and short-term, limited-duration insurance (STLDI).
The Secretaries will consider favorably section 1332 waiver applications that advance some or all of these five principles as elements of a section 1332 waiver application. The principles are:
* Provide increased access to affordable private market coverage. Making private health insurance coverage more accessible and affordable should be a priority for a section 1332 waiver. A section 1332 state plan should foster health coverage through competitive private coverage, including AHPs and STLDI plans, over public programs. Additionally, the Departments will look favorably upon section 1332 applications under which states increase issuer participation in state insurance markets and promote competition.
* Encourage sustainable spending growth. Section 1332 waivers should promote more cost-effective health coverage and be fair to the federal taxpayer by restraining growth in federal spending commitments. For example, states should consider eliminating or reducing state-level regulation that limits market choice and competition in order to reduce prices for consumers and reduce costs to the federal government, as part of their section 1332 waiver applications.
* Foster state innovation. States are better positioned than the federal government to assess and respond to the needs of their citizens with innovative solutions. We encourage states to craft solutions that meet the needs of their consumers and markets and innovate to the maximum extent possible under the law.
* Support and empower those in need. Americans should have access to affordable, high value health insurance. Some Americans, particularly those with low incomes or high expected health care costs, may require financial assistance. Policies in section 1332 waiver applications should support state residents in need in the purchase of private coverage with financial assistance that meets their specific health care situations.
* Promote consumer-driven healthcare. Section 1332 waivers should empower Americans to make informed choices about their health coverage and health care with incentives that encourage consumers to seek value. Instead of only offering a one-size-fits-all plan proposal, a section 1332 state plan should focus on providing people with the resources and information they need to afford and purchase the private insurance coverage that best meets their needs.
From II. Changes to 2015 Guidance
A major disadvantage of the 2015 interpretation was that it deterred states from providing innovative coverage that, while potentially less comprehensive than coverage established under the PPACA, could have been better suited to consumer needs and potentially more affordable and attractive to a broad range of its residents. For example, even if coverage similar to that made available under the PPACA remained available in a state, an offer of more attractive, but less comprehensive plans would have reduced the number of residents who elected PPACA-like coverage, and would likely have caused the state waiver plan to fail the comprehensiveness guardrail. To avoid this effect of the 2015 guidance, this guidance focuses on the availability of comprehensive and affordable coverage. This shift in focus ensures that state residents who wish to retain coverage similar to that provided under the PPACA can continue to do so, while permitting a state plan to also provide access to other options that may be better suited to consumer needs and more attractive to many individuals.
The coverage guardrail requires that coverage be provided to at least a comparable number of residents as would occur absent the waiver. However, the text of the coverage guardrail provision of the statute is silent as to the type of coverage that is required. Accordingly, to enable state flexibility and to promote choice of a wide range of coverage to ensure that consumers can enroll in coverage that is right for them, this guidance permits states to provide access to less comprehensive or less affordable coverage as an additional option for their residents to choose. This guidance on the coverage guardrail continues to consider the number of state residents who are actually receiving coverage. As long as a comparable number of residents are projected to be covered as would have been covered absent the waiver, the coverage guardrail will be met.
From III. Statutory Guardrail Requirements
A. Comprehensiveness and Affordability
The Departments may consider these guardrails met if access to coverage that is as affordable and comprehensive as coverage forecasted to have been available in the absence of the waiver is projected to be available to a comparable number of people under the waiver. The Departments will not require projections demonstrating that this coverage will actually be purchased by a comparable number of state residents; in other words, these guardrails will be met if the state plan has made other coverage options available that state residents may prefer, so long as access to affordable, comprehensive coverage is also available.
B. Number of State Residents Covered (Coverage)
A section 1332 state plan will be considered to comply with this coverage guardrail if, for each year the waiver is in effect, the state can demonstrate that a comparable number of state residents eligible for coverage under title I of PPACA will have health care coverage under the section 1332 state plan as would have had coverage absent the waiver. For purposes of meeting this guardrail, in line with the Administration’s priority favoring private coverage, including AHPs and STLDI plans, the Departments will consider all forms of private coverage in addition to public coverage, including employer-based coverage, individual market coverage, and other forms of private health coverage.
C. Deficit Neutrality
Under the deficit neutrality requirement, the projected federal spending net of federal revenues under the section 1332 waiver must be equal to or lower than projected federal spending net of federal revenues in the absence of the section 1332 waiver.
By Don McCanne, M.D.
Section 1332 of the Affordable Care Act authorizes the states to apply for waivers to modify health plans offered through their insurance exchanges as long as they still meet certain specifications that fulfill the intent of the legislation. Now the Trump administration wishes to reduce federal regulatory oversight of the exchange plans with the ideological goal of allowing states to “increase choice and competition within their insurance markets.”
They plan to do that by using the “Guidance” released today. Wading through their regulatory jargon, their intent is made clear by this statement: “… in line with the Administration’s priority favoring private coverage, including AHPs (Association Health Plans) and STLDI plans (short-term, limited-duration insurance), the Departments will consider all forms of private coverage in addition to public coverage, including employer-based coverage, individual market coverage, and other forms of private health coverage.”
The perilous deficiencies of AHPs and STLDI plans have provoked concerns, but the administration apparently has been tone deaf to these concerns. They state that it remains their priority to favor private coverage, including these deficient insurance products.
According to the Guidance, “the Departments have determined that the analysis of comprehensiveness and affordability of coverage under a waiver should focus on the nature of coverage that is made available to state residents (access to coverage), rather than on the coverage that residents actually purchase” and “this guidance permits states to provide access to less comprehensive or less affordable coverage as an additional option for their residents to choose.” As they repeatedly state, it’s all about access (to insurance products, not health care).
Also, “the Departments will consider the longer-term impacts of a state’s proposal, and may approve a waiver even where a state expects a temporary reduction in coverage but can demonstrate that the reduction is reasonable under the circumstances, and that the innovations will produce longer-term increases in the number of state residents who have coverage such that, in the aggregate, the coverage guardrail will be met or exceeded over the course of the waiver term.” They will approve waivers that reduce the number of insured, in exchange for a promise (a la Trump) that they’ll cover them later.
Deficit neutrality is met even if federal spending net of federal revenues is lower than projected federal spending net of federal revenues in the absence of the section 1332 waiver, but, of course, not if it is higher. Obviously, this administration’s goal is to reduce federal spending.
This would all go away if we would enact and implement an improved Medicare for All. But Seema Verma says, “Medicare for All would become Medicare for None.” We desperately need government health care stewards with a much better vision than that.
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