HHS Expected to Allow States to Waive Obamacare Provisions

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By Sara Hansard

States may receive more flexibility to make changes to their Obamacare markets under rules likely to be issued soon by the Trump administration, a health-care lobbyist said July 25.

“We know President Trump and the administration is rethinking maybe what the enforcement rule looks like, and some of the requirements around the enforcement rule” for state waivers under Section 1332 of the Affordable Care Act, Joel White, president of the Council for Affordable Health Coverage, said at a Capitol Hill briefing.

The changes could make it easier for states to make changes affecting the comprehensiveness of coverage, he said. “We are expecting a new enforcement rule out soon,” he said.

States often call for more flexibility under the ACA to make changes they believe will stabilize their individual and small group markets, and the Trump administration has put more emphasis on giving states more flexibility. Many states have complained that rules issued during the Obama administration implementing Section 1332 are too rigid and prevent them from making changes needed to allow for more affordable coverage.

Under the provision states can request changes to requirements for health plans and their ACA marketplaces as long as the changes result in coverage that is at least as comprehensive and affordable, and as long as they don’t increase the federal deficit.

The Department of Health and Human Services didn’t respond to a request for comment from Bloomberg Law.

Exchanges ‘Relatively Unstable’

States need more flexibility to stabilize their Obamacare marketplaces, which are “relatively unstable,” with enrollment primarily among sicker and older people who are eligible for subsidies, White said.

Prior to 2014, when the ACA’s primary provisions took effect, Wisconsin had 25 carriers offering a variety of types of coverage in its individual market, mostly throughout the entire state, the state’s deputy insurance commissioner, J.P. Wieske, said.

Currently, many parts of the state have only one carrier, the ACA-sponsored Common Ground Healthcare Cooperative, which has had financial problems, Wieske said. “That puts us in a precarious position,” he said.

Minnesota, which set up its own state-based exchange, has seen “year over year increases of more than 50 percent” since the ACA took effect, Scott Keefer, vice president of public affairs at Blue Cross and Blue Shield of Minnesota, said.

The state was able to reduce premiums by 7 to 12 percent for 2018 after its application for a reinsurance program was approved, he said.

Moreover, the number of people enrolled in the state’s individual market has plunged from about 300,000 to just under 170,000 since 2014, making the market less stable, he said.

Blue Cross and Blue Shield of Minnesota lost $500 million in the individual market in the first three years of the ACA’s operation, he said.

Focus on Unsubsidized Population

The chief problem many states are trying to grapple with is finding ways for people who make too much money for federal ACA subsidies to find affordable coverage, speakers at the briefing said.

About 87 percent of enrollees in the ACA marketplaces receive federal subsidies.

But the unsubsidized population that doesn’t have access to employer-sponsored coverage is “stuck with these very high premiums, and they’re going to look for other options,” Brian Webb, assistant director of health policy and legislation for the National Association of Insurance Commissioners, said.

Those options may include short-term limited-duration plans and other forms of coverage that don’t comply with the ACA, Webb said.

The administration is likely to issue a final rule soon that would allow short-term limited duration plans to cover enrollees for up to a year, rather than just three months under a regulation issued by the Obama administration in 2016.

The plans typically don’t cover people with pre-existing medical conditions, and they don’t cover all the comprehensive benefits required under the ACA.

States have so far focused on applying for Section 1332 waivers to set up reinsurance programs in their states. Reinsurance covers high-cost claims. Providing government help to insurers to cover high-cost claims lowers premiums, which helps attract younger, healthier people into the marketplaces.

Alaska, Oregon, and Minnesota have received waivers to set up reinsurance programs, and Wisconsin, New Jersey, Maryland, and Maine have submitted applications to the HHS to create such programs, Webb said.

Flexibility on Plan Design

States would like to see federal rules regarding the 1332 waivers give them more flexibility on plan design, Wieske said.

For example, many people in the individual market in Wisconsin are farmers, who used to purchase health insurance policies that included work-related injuries before the ACA rules took effect, he said.

In addition, Wisconsin is looking for more flexibility to promote the use of association health plans, Wieske said. The Trump administration recently issued final rules that make it easier to offer association health plans, which may not comply with all ACA requirements.

“We want to use more private [exchanges] and private channels to deliver plans,” White, of the Council for Affordable Health Coverage, said. In some states there may only be one plan on the ACA exchanges, while there may be three or four choices outside of the exchanges, he said.

States are looking for the federal government to make changes in how it will implement the requirements of Section 1332, the NAIC’s Webb said. “When you look at something that says it has to be as comprehensive or it has to be as affordable, well, than what?” he asked.

Some states are looking at taking steps to offer coverage less comprehensive than ACA coverage to unsubsidized people, Webb said.

“That’s more comprehensive than what they’re going to get, which is, what? Nothing,” he said.

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