Massachusetts Obamacare Waiver Denied by HHS

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By Sara Hansard

Massachusetts became the third state to drop out of the race to get Obamacare waivers to stabilize health insurance premiums after the HHS denied its application Oct. 23.

The waiver, filed Sept. 8, wasn’t submitted early enough to allow implementation before the Nov. 1 beginning of open enrollment for the 2018 Affordable Care Act exchanges, the HHS’s Centers for Medicare & Medicaid Services said. Sen. Lamar Alexander (R-Tenn.), chairman of the Senate Committee on Health, Education, Labor and Pensions, issued a statement touting legislation he and ranking Democrat Patty Murray (D-Wash.) are working on, which would allow states to get waivers in 45 days if urgent action is required.

Oklahoma and Iowa recently dropped their requests under the ACA’s Section 1332 for state innovation waivers. However, the Department of Health and Human Services has approved plans submitted by Alaska, Minnesota, and Oregon that should help reduce premium spikes. The Section 1332 waivers, which became available to states in 2017, allow a state to pursue innovative strategies for providing their residents with access to health insurance while retaining the basic protections of the ACA.

CSR Payments Discontinued

President Donald Trump Oct. 12 announced the federal government wouldn’t continue making cost-sharing reduction payments to insurers because Congress hasn’t appropriated funding. Under the ACA, insurers are required to provide plans with low cost-sharing requirements to people with incomes between 100 percent and 250 percent of the poverty level. Insurers need higher premiums to cover the loss of the federal payments.

Massachusetts proposed in its application that instead of increasing member premiums to offset the loss of federal CSR funding, the federal government could instead give the money that would have been spent, about $146 million, directly to the state to ensure that carriers were compensated for the costs of providing care to low-income Health Connector members.

The Health Connector will evaluate the prospects of filing a similar waiver for 2019 and continue to talk to federal partners about other proposals, spokesman Jason Lefferts told Bloomberg Law Oct. 24.

Massachusetts Covering 2017 CSRs

“With federal CSR payments halted and $28 million remaining in 2017 payments to Massachusetts carriers, the Baker-Polito administration will cover this cost through the end of the calendar year to protect the stability of the health insurance market,” Lefferts said, referring to Republican Gov. Charlie Baker and Lt. Gov. Karyn Polito.

Other states are taking action to deal with the loss of CSR reimbursements to insurers. The Maryland Insurance Administration held a hearing Oct. 23 on proposals to increase its 2018 rates following the elimination of the CSR payments.

Rates for the most popular silver-tier exchange plans offered by CareFirst BlueChoice Inc., the state’s largest carrier, were approved to rise 31.4 percent before the CSR payments were stopped. The new rates for silver-tier plans offered by CareFirst BlueChoice would rise 60.1 percent under the proposal.

“The administration has been approving reinsurance waivers that follow the Alaska model quite rapidly,” Timothy Jost, an expert on the ACA who blogs for Health Affairs magazine, told Bloomberg Law in an email Oct. 24.

Alaska used its 1332 waiver to set up a reinsurance program to cover enrollees with high claims costs. That will lower premiums in Alaska’s exchange, which will in turn will lower payments the federal government makes for premium subsidies.

“Analysis of waivers involving other modifications to the ACA, like the Iowa and Massachusetts proposals, require careful analysis and take more time. Neither state filed their applications in time for that analysis to take place,” he said.

To contact the reporter on this story: Sara Hansard in Washington at shansard@bna.com

To contact the editor responsible for this story: Kendra Casey Plank at kcasey@bna.com

For More Information

The Oct. 23 letter to the Massachusetts Health Connector is at http://src.bna.com/tCN.

Alexander and Murray's draft market stabilization legislation is at http://src.bna.com/tCP.

Massachusetts's 1332 waiver application is at http://src.bna.com/tDD.

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