Trump Administration Unveils More Options for States to Bypass ACA
Late last week, the Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma announced four new Section 1332 state innovation waiver concepts for states to make changes to their individual insurance markets (fact sheet). The new waiver concepts build on the recently issued CMS guidance on Section 1332 waivers, under which CMS aims to strengthen states’ authority to shape their health insurance markets. The Administrator stated in her keynote address at the States and Nation Policy Summit of the American Legislative Exchange Council (ALEC) that it was a mistake to federalize so much of health care policy under the Affordable Care Act (ACA), and that the new concepts are “designed to illustrate how states can waive certain ACA provisions under section 1332 of the law and develop alternatives to the ACA’s otherwise one-size-fits-all approach.”
Administrator Verma explained that states could choose to use the waiver concepts alone, in conjunction with other waiver concepts, or in combination with other innovative state proposals to restructure “some of the most restrictive ACA requirements.” The CMS Administrator clarified that the ACA’s pre-existing conditions protections could not be waived under the new concepts. The four new waiver concepts unveiled by CMS included:
- Account-Based Subsidies — One new concept using an account-based approach was highlighted by Administrator Verma as the best potential pathway to addressing “various structural problems” within the ACA. States could use 1332 waivers to create a new account-based program to help subsidize health care expenses and would allow state governments to provide a cash contribution which could be utilized for premiums and out-of-pocket expenses. She touted the concept as a tool for states to maximize consumer choice and engagement, as well as provide the opportunity to create “true portability and continuity” across the ACA Exchange, Medicaid, and employer-sponsored insurance. Administrator Verma noted use of these programs would give individuals flexibility to make smarter health spending decisions, as they directly retain leftover funds from the accounts.
- State-Specific Premium Assistance — States will be encouraged to create and administer a subsidy program and develop a subsidy structure to fit the needs of their specific population. CMS aims to expand access to affordable health plan options, attract young and healthy consumers to the market, and address structural issues such as the “subsidy cliff.”
- Notably, this proposal could direct more consumers toward cheaper health care coverage options, including non-comprehensive plans that lack mental health and addiction coverage.
- Adjusted Plan Options — States will be given power to determine which types of health plans, including non-Qualified Health Plans, are eligible for state premium subsidies in the interest of increasing access to health plan options. CMS suggests states might use this waiver concept in conjunction with Account-Based Subsidies waivers to provide subsidies in the form of contributions to accounts, allowing individuals to use the funds to purchase coverage that is right for them and use any remaining funds in the account to offset out-of-pocket health care expenses.
- Similarly, this proposal could make non-comprehensive health plans more widely available, exposing more consumers to so-called “junk insurance.”
- Risk Stabilization Strategies — States will be given additional flexibility to implement reinsurance programs or high-risk pools in order to “address the costs of high-risk individuals.”
States have expressed interest in pursuing changes to health insurance exchanges using Section 1332 authority and have sought more detail from CMS around permissible concepts. With the new concepts in hand, this may provide more states with the certainty needed to invest in assessing their options and developing state-tailored proposals. The scope of the options available may present new opportunities for stakeholders to inform and shape future waiver submissions.