Medicaid 101 Policy Academy: Innovation Waiver Program

The Council of State Governments

The Section 1332 Innovation Waiver Program: What Is It and What Are States Doing?

Justin Giovannelli, J.D., M.P.P. Associate Research Professor Georgetown University Center on Health Insurance Reforms October 10, 2019 1 @GtownCHIR

Agenda • Overview of Section 1332 Waiver Program • Landscape of State Efforts Under Section 1332

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OVERVIEW OF SECTION 1332 WAIVER PROGRAM

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Section 1332 Waivers •

Section 1332 of the Affordable Care Act (ACA) allows states to apply to waive certain provisions of the ACA in service of state-specific strategies to improve health insurance coverage.

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Waivers can last up to 5 years and are renewable.

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States can access federal funding. If a state’s waiver plan reduces federal spending on coverage subsidies, the federal government will pass through those savings to the state for the purpose of implementing the waiver.

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A 1332 can be submitted together with a Medicaid Section 1115 waiver, but each waiver is evaluated separately.

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States need statutory authority to submit and implement.

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1332 Waivers: What Can Be Waived • States can modify or eliminate rules regarding: – Benefits and coverage levels, including the ACA definition of essential health benefits (EHB); metal tiers (bronze, silver, gold, platinum) – Marketplaces and health plans sold through the marketplace, including rules related to marketplace establishment and operations; certification requirements for qualified health plans (QHPs) sold through the marketplace – Subsidies, including subsidy amounts and eligibility requirements – Employer mandate (requirement that large employers offer affordable coverage to full-time employees, or pay a penalty)

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1332 Waivers: Statutory Guardrails • A waiver application cannot be approved unless it complies with four statutory requirements: – Comprehensive coverage. Program “will provide coverage that is at least as comprehensive as the coverage defined in” the ACA’s EHB requirement, as certified by CMS, Office of the Actuary.

– Affordable coverage. Program “will provide coverage and cost-sharing protections against excessive out-of-pocket spending that are at least as affordable” as would be provided without the waiver.

– Coverage take-up. Program “will provide coverage to at least a comparable number of its residents” as would receive coverage without the waiver.

– Deficit neutrality. Program must not increase the federal deficit.

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1332 Waivers: Federal Guidance • 2015: Guidance says waivers will be evaluated as a whole, but can’t make vulnerable populations worse off.

• 2018-19: Old guidance rescinded. Administration announces new, relaxed standards for meeting guardrails.

– White papers describing four waiver concepts – Template applications for each concept

• Current (2018) Guidance – Key element of concerted effort by CMS to give states more flexibility under the waiver program – GAO legal opinion concludes new guidance qualifies as a rule, is subject to Congressional Review Act – New interpretation of guardrails poses significant litigation risk – Guidance and concepts are as yet untested

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LANDSCAPE OF STATE EFFORTS UNDER SECTION 1332

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State Action on 1332 Waivers (October 2019) Waiver approved by federal government WA

Waiver withdrawn from federal consideration

ME

NH MT

VT

ND

OR

MN

ID

State has explicit authority to submit waiver

WY NV

MI

CA

AZ

CO

IL KS

OK

NM

TX HI

PA

OH

IN

MO

NJ DE

WV

MD

KY NC

TN

AR

AL

DC VA

SC MS

AK

RI

IA

NE UT

MA

NY

WI

SD

GA

LA FL

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CT

Approved Waivers (October 2019) Waiver supports stateoperated reinsurance program.

WA MT

Waives requirement to operate small business marketplace and related provisions.

ME

NH VT

ND

OR

MN

ID WY NV

MI

CA

AZ

CO

IL KS

OK

NM

TX HI

PA

OH

IN

MO

NJ DE

WV

MD

KY NC

TN

AR

AL

DC VA

SC MS

AK

RI

IA

NE UT

MA

NY

WI

SD

GA

LA FL

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Withdrawn Applications (October 2019) Would have allowed some people eligible for Medicaid expansion to enroll in marketplace instead.

WA MT

VT

ND

OR

MN

ID

Would have supported reinsurance.

WY NV

Would have simplified marketplace plan offerings and implemented state subsidy program in place of current system.

ME

NH

MI

CA

AZ

CO

IL KS

OK

NM

TX

AK HI

PA

OH

IN

MO

NJ DE

WV

MD

KY NC

TN

AR

AL

DC VA

SC MS

Other.

RI

IA

NE UT

MA

NY

WI

SD

GA

LA FL

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Reinsurance Waivers: States’ Goals • Reduce premiums. Injection of funding external to the individual market lowers premiums, benefiting unsubsidized consumers who aren’t receiving any other assistance.

• Reduce market volatility. Spreads the risk of exposure to the highest-cost (and often, least predictable) claims.

• Promote competition. Greater stability makes participating in the individual market more attractive for carriers.

• Leverage new funding opportunities. The premium reduction caused by reinsurance reduces federal spending. States can access these savings to help pay for the program. @GtownCHIR

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