By John Falardeau
Late last month, the U.S. Department of Health and Human Services (HHS) released a guidance document significantly changing the way the department will handle waiver requests under the 2010 Affordable Care Act (Act). This enhanced flexibility from the Act could lead to far greater variation across states in the types of plans offered, creating a “patchwork quilt” of benefits and services available to consumers.
The revised guidance, more commonly known as “Section 1332 waivers” (which applies to the section of the Act that governs the process) or “state innovation waivers,” will now be known as “state relief and empowerment waivers,” which prioritize private insurance over public exchange plans and encourages states to offer short-term plans and association health plans. HHS claims that the new guidance will lower barriers to states seeking to implement waivers and encourage more coverage options.
The new guidance comes after several states asked for greater flexibility. While the guidance takes effect immediately, it won’t really affect health plans until the 2020 plan year. Open enrollment for 2019 has already begun, so plans and prices are already set. However, CMS has approved 1332 waivers for eight states, seven of which were used to set up reinsurance programs that lowered premiums for plans sold on the federal and state exchanges. In essence, reinsurance programs provide government funding for the highest-cost patients.
The administration has defended expanding the sale of more plans that don’t comply with the Act as an option to offer more affordable coverage options to people who feel priced out of the individual market. While premiums are set to decrease on average in 2019, this comes after years of double-digit increases for plans sold on the exchanges. What’s also noteworthy is that the revised guidance could also make it easier for states to apply for a waiver. Currently, state legislatures must pass a law to prompt a state to seek a waiver. Now, governors can unilaterally, request a waiver from the Act from HHS.
HHS claims that the new guidance would not change protections for people with pre-existing conditions, which has become a hot issue in congressional mid-term elections. Many health care organizations, including ACA, have warned that association health plans--a policy that the current administration aims to expand with this guidance--will lead to a “race to the bottom,” as these plans will only offer access to bare-bones benefits.
HHS claims that the new guidance would not change protections for people with pre-existing conditions, which has become a hot issue in congressional mid-term elections. Many health care organizations, including the ACA, have warned that association health plans--a policy that the current administration aims to expand with this guidance--will lead to a “race to the bottom,” as these plans will only offer access to bare-bones benefits.
What’s also concerning is that under the previous guidance, states applying for a Section 1332 waiver had to show that a comparable number of residents would have insurance coverage with the waiver as without and that coverage would be as comprehensive and affordable. Those “guardrails,” as the previous administration called them, were meant to ensure that a waiver did not lead to less comprehensive coverage. Under the revised guidance, states will have to show that an equal number of residents will have access to coverage of some form, which could include plans that do not meet the Act’s benefit requirements. That means that someone with a short-term plan or an association health plan, which do not have to meet all the Act’s requirements and that the administration has expanded through final rules released earlier this year, would be counted in that number.
HHS is due to release waiver concepts in the coming weeks that could serve as starting points for states considering what they might apply for. Chiropractic state associations need to be vigilant in monitoring this new guidance scheme, as many governors may act quickly to take advantage of the new flexibility now afforded them.
John Falardeau is ACA’s senior vice president for public policy and advocacy.
Read more about the new guideline: