Federal Subsidies Could Expand to Health Programs That Violate Obamacare

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 The Trump administration said Thursday that states could bypass major requirements of the Affordable Care Act by using federal funds for a wide range of health insurance programs that do not comply with the law.

Federal officials encouraged states to seek waivers from provisions of the law that specify who is eligible for premium subsidies, how much they get and what medical benefits they receive.

It was “a mistake to federalize so much of health care policy under the Affordable Care Act,” Seema Verma, the administrator of the Centers for Medicare and Medicaid Services, told state officials at a conference in Washington.

The new policy outlined by the administration on Thursday upends a premise of the Affordable Care Act: that federal subsidies can be used only for insurance that meets federal standards and is purchased through public marketplaces, also known as insurance exchanges.

Under the new policy, states could use federal subsidies to help people pay for employer-sponsored insurance. Consumers could combine federal funds with employer contributions to buy other types of insurance.

Under the Affordable Care Act, premium tax credits are available to people with incomes up to four times the poverty level, roughly $83,000 a year for a family of three. With a waiver, states could provide assistance to higher-income families.

The Trump administration laid out templates for state programs — waiver concepts — that could significantly depart from the model enacted by Congress in 2010.

Alex M. Azar II, the secretary of health and human services, said states could use the suggestions to “create more choices and greater flexibility in their health insurance markets, helping to bring down costs and expand access to care.”

Democrats assailed the initiative as an audacious effort to undermine the Affordable Care Act. And they said the administration was ignoring the midterm election success of Democrats who had promised to defend health care that they said was threatened by President Trump and Republicans in Congress.

“The American people just delivered an overwhelming verdict against Republicans’ cruel assault on families’ health care,” said the House Democratic leader, Nancy Pelosi of California. “But instead of heeding the will of the people or the requirements of the law, the Trump administration is still cynically working to make health insurance more expensive and to leave more Americans without dependable coverage.”

Senator Ron Wyden of Oregon, the senior Democrat on the Finance Committee, said the administration was creating a fast lane for swift approval of “junk insurance.”

The Affordable Care Act prohibits insurers from denying coverage or charging higher premiums to people with pre-existing medical conditions. At campaign rallies this fall, Mr. Trump repeatedly promised: “We will always protect Americans with pre-existing conditions. Always.”

Ms. Verma said Thursday that “the A.C.A.’s pre-existing condition protections cannot be waived.

But states could use federal funds to subsidize short-term plans and “association health plans,” in which employers band together to provide coverage for employees. Such plans are free to limit or omit coverage of benefits required by the Affordable Care Act, such as mental health care, emergency services and prescription drugs.

A provision of the Affordable Care Act allows waivers for innovations in state health policy. The federal law stipulates that state programs must provide coverage that is “at least as comprehensive” as that available under the Affordable Care Act and must cover “at least a comparable number” of people.

Two powerful House Democrats said the new guidance issued by the Trump administration was illegal because it did not meet the standards for waivers set forth in the Affordable Care Act.

“It is contrary to the plain language of the statute, and it appears to be part of the administration’s ideologically motivated efforts to sabotage the Affordable Care Act,” said a letter sent to Mr. Azar by Representatives Frank Pallone Jr. of New Jersey and Richard E. Neal of Massachusetts.

In issuing the guidance, they said, Mr. Azar also violated the Administrative Procedure Act, which generally requires agencies to provide an opportunity for public comment before adopting new rules.

Republican governors have been pleading with federal officials to give states more authority to regulate health insurance.

Paul Edwards, a deputy chief of staff to Gov. Gary Herbert of Utah, a Republican, said, “Utah welcomes all efforts that give us maximum flexibility to structure our health care programs to the unique needs of our citizens.” State officials “will look closely at how these new rules could benefit Utahns,” he said.

Brenna Smith, a spokeswoman for Gov. Kim Reynolds of Iowa, a Republican, said the governor “has a proven track record of expanding health care options for Iowans and is eager to see the new opportunities this proposal might open up.”

Iowa tried last year to get a waiver under Obama-era guidance, seeking essentially to opt out of the Affordable Care Act marketplace by offering customers a single plan with lower premiums and a high deductible.

Ms. Reynolds ultimately withdrew the request in frustration, saying at the time that “Obamacare’s waiver rules are as inflexible as the law itself.”

One option for states is to take federal funds and put the money into accounts that consumers could use to pay insurance premiums or medical expenses.

Likewise, Ms. Verma said: “States can develop a new state premium subsidy structure and decide how premium subsidies should be targeted. States can set the rules for what type of health plan is eligible for state premium subsidies.”

She was speaking Thursday at a conference of the American Legislative Exchange Council, a conservative group that promotes limited government and drafts model legislation.


CMS announces new waiver flexibility in ACA market



States will have the ability to allow individuals to use ACA subsidies when buying short-term limited duration plans.

States are getting new flexibility in waivers to the Affordable Care Act, including being able to target ACA subsidies for individuals who want to buy short-term, limited duration plans, Centers for Medicare and Medicaid Services Administrator Seema Verma said today.

What is not flexible is protecting access to coverage to those with pre-existing conditions.

Verma gave no specifics on the types of waivers that will be considered, but said the agency was preparing to release a series of waiver concepts. More specifics are expected to be released in the coming weeks.

The policy goes into effect today but is expected to impact states next year, for the 2020 plan year.


The effect of the waivers will likely not be known until next year.

But the allowance of short-term insurance as an ACA alternative could have a more immediate effect as consumers choose plans during open enrollment starting November 1.

The Trump Administration this year extended the length of short-term plans from three months to one year, with an extension allowed for up to three years. Because these plans would not be obligated to cover the essential benefits mandated under the ACA, premiums are expected to be lower.

Opponents have said this would cause an exodus of healthy consumers from the traditional ACA market and rising prices for those left behind.


CMS has been taking credit for stabilizing the ACA market and lowering premiums through the use of waivers and by easing regulations.

For instance, reinsurance waivers have helped reduce premium costs, CMS said. To date, CMS has approved eight state waivers, and all but one have been a reinsurance waiver for states to develop high-risk pools to help pay the cost of high claims.

The reason for the lack of other approved waivers is due to the previous Administration limiting the types of state waiver proposals that the government would approve, CMS said.

The new Section 1332 waivers, called state relief and empowerment waivers, will allow states to “get out from under onerous rules of Obamacare,” Verma said.


Under Section 1332 of the ACA, states can waive certain provisions of the law as 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.

The new 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, CMS said.


“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,” said Health and Human Services Secretary Alex Azar.

“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.”


Why the new ACA waivers matter



As in-the-weeds as a revised waiver process sounds, the practical effects of what the Trump administration announced yesterday could add up to one of its most substantive blows yet against the Affordable Care Act.

The big picture: These changes will likely cause more separation of healthy and sick people, but only in states that avail themselves of these new options — creating another level of segmentation between red and blue states.

How it works: Under the Obama administration, states seeking a waiver from the ACA’s rules had to show that their alternatives would cover just as many people as the ACA, with insurance that’s just as robust, for the same cost. That’s why only 8 waivers have ever been granted.

  • But under the Trump administration’s approach, if the same number of people have access to ACA-level coverage, that’ll count — even if few of them actually choose it.
  • Likewise, “a waiver that makes coverage much more affordable for some people and only slightly more costly for a larger number of people would likely meet” the new standards, the formal policy guidance says.
  • States could, for example, seek a waiver that would let their residents apply the ACA’s premium subsidies to “short-term” insurance plans, even though those plans don’t meet the ACA’s requirements, including the mandate to cover people with pre-existing conditions.

Between the lines: The Trump administration has often treated the ACA’s exchanges as a de facto high-risk pool. And that’s the best prism through which to understand these latest changes.

  • These waivers will let states lean even further into new, non-ACA options for healthy people. That will likely increase premiums for ACA coverage. But because the vast majority of ACA enrollees are subsidized, they’ll be insulated from those costs.

There are limits to how far that dynamic can go, because states’ waivers still can’t add too much to the federal government’s costs. But that’s the basic dynamic at play here — and it’s one that will continue to move the larger individual market further and further away from the ACA.


Repeal push complicates state efforts to get ObamaCare waivers


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A number of states are readying blueprints for substantial changes under an ObamaCare waiver program, but a renewed push to repeal the law is complicating their plans.

The Affordable Care Act’s 1332 State Innovation Waiver lets states skip some of the law’s regulations if their healthcare plan covers a comparable number of people without increasing the federal deficit. States can apply for the waivers starting this year.

But a revived attempt to repeal the health law is throwing a wrench in those plans, since states don’t know what a new bill will entail. While House Republicans moved forward an amendment in committee to their larger repeal bill on Thursday, the party is far from reaching a consensus.

“The way we are tackling those great uncertainties is that we have to continue to move forward with plans to make the market more stable and proceed along a path that works within the current regulatory framework,” said Oklahoma Health Care Authority Chief Strategy Officer Buffy Heater. “Now we have to of course be mindful of any other proposals that may come up, or any movements that may be made at that time, and be flexible and adapt to whatever changes those might bring.”

Oklahoma is preparing to file a plan with the Centers for Medicare and Medicaid Services later this summer that would implement sweeping changes to the state’s individual insurance market.

If approved, the waiver would establish what Duke University health policy researcher David Anderson calls a “backdoor Medicaid expansion” by shifting subsidies from people between 100 percent to 400 percent of the federal poverty level to those between 0 percent to 300 percent.

The waiver would also allow insurers to charge older members more, restructure subsidies based on age and income, eliminate tiers in favor of two broader categories and require insurers to establish a minimum amount of value-based agreements. Officials also want to regulate outcomes in a number of areas, including mental health, diabetes and obesity.

The stakes are high. Blue Cross Blue Shield of Oklahoma is the only carrier left on the state exchanges, and the state suffers from low enrollment rates. Heater said CMS has promised the state an expedited waiver review but no assurances that things won’t change.


Obamacare Waiver Gives States Opening For Huge Reforms. But Will They Take It?Experts don’t expect states to pursue foundational reforms at first under the ACA waiver program.


Experts don’t expect states to pursue foundational reforms at first under the ACA waiver program.