States could develop innovative solutions to help their consumers combat skyrocketing premiums and limited plan options
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.
“President Trump has already opened up more affordable, flexible options for Americans in the individual health insurance market, while also bringing new stability to the Exchange,” said HHS Secretary Azar. “Now, states will have a clearer sense of how they can take the lead on making available more insurance options, within the bounds of the Affordable Care Act, that are fiscally sustainable, private sector-driven, and consumer-friendly.”
“The Trump Administration inherited a health insurance market with skyrocketing premiums and dwindling choices,” said CMS Administrator Seema Verma. “Under the President’s leadership, the Administration recently announced average premiums will decline on the Federal Exchange for the first time and more insurers will return to offer increased choices. But our work isn’t done. Premiums are still much too high and choice is still too limited. 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.”
With this guidance, states will be able to develop innovative approaches that break away from the otherwise inflexible federal approach and increase consumer control and expand choice and competition in their markets. In addition to this guidance, CMS is also preparing to release waiver concepts to help spur conversations and ideas with states, and illustrate how states might take advantage of this new opportunity to move beyond the ACA.
Federal law, under Section 1332 of the ACA, authorizes states to waive certain provisions of the law so long as the new state waiver plan meets specific criteria, or “guardrails,” that help guarantee people retain access to coverage that is at least as comprehensive and affordable as without the waiver, covers as many individuals, and is deficit neutral to the federal government.
However, guidance issued under the previous Administration in 2015 substantially and unnecessarily limited the types of state waiver proposals that the federal government would approve. To date, these limitations have effectively restricted state waivers to just one type, a reinsurance waiver. While this Administration has worked closely with a number of states to put single-purpose reinsurance waivers in place and these have resulted in significantly reduced premiums in those states, the statutory waiver authority set out in the ACA permits states to accomplish far more to improve choice and competition for their residents.
Today’s guidance marks a new direction that delivers the flexibility the law always intended for states. To begin, the guidance outlines five principles for states to follow as they work to develop innovative new approaches. Moving forward, state waivers should aim to: provide increased access to affordable private market coverage; encourage sustainable spending growth; foster state innovation; support and empower those in need; and promote consumer-driven healthcare.
The new flexibilities available to states include the following:
- Allows states to provide consumers with plan options that best meet their needs, while, at the same time, ensuring people, including those with pre-existing conditions, retain access to the same level of coverage available today without the waiver;
- Continues to require that a comparable number of people have coverage, but expands the definition of coverage to include more types of coverage, such as short-term plans;
- Provides greater flexibility for states to consider improvements in comprehensiveness and affordability for state residents as a whole versus the prior focus on specific populations;
- Supports increased variation and flexibility for states that may want to leverage components of the Federal Exchange platform to implement new models; and
- Provides flexibility for states to meet the state legislative authority requirement. The guidance clarifies that in certain circumstances, existing state legislation that provides statutory authority to enforce ACA provisions and the state plan, combined with a duly-enacted state regulation or executive order, may satisfy the requirement that the state enact a law.
This announcement builds on recent actions taken by CMS to provide relief to American families struggling with the impacts of the ACA and rising cost of insurance. Recently finalized rules by the Departments of Health and Human Services (HHS), Labor, and the Treasury, in response to the President’s October 2017 Executive Order 13813, “Promoting Healthcare Choice and Competition Across the United States,” expanded consumer options to use Association Health Plans and short-term plans. In April, CMS issued the HHS Notice of Benefit and Payment Parameters for 2019, which will improve program integrity, increase state flexibility, and reduce regulatory burdens of the health insurance markets for millions of Americans.
The Departments are committed to empowering states to innovate in ways that will best protect people with pre-existing conditions, strengthen their health insurance markets, expand affordable choices of coverage, target public resources to those most in need, and meet the unique circumstances of each state. We welcome comments on all aspects of the guidance.
A fact sheet on today’s guidance can be found here: https://www.cms.gov/CCIIO/Programs-and-Initiatives/State-Innovation-Waivers/Downloads/SRE-Waiver-Fact-Sheet.pdf
The guidance on State Relief and Empowerment Waivers can be found here: https://s3.amazonaws.com/public-inspection.federalregister.gov/2018-23182.pdf