RED ALERT: Seema Verma gets tired of waiting for legislative or judicial action to gut the ACA, decides to do it herself.

2019 OPEN ENROLLMENT ENDS (most states)

Time: D H M S

 

One of the great strengths and dangers of the ACA is that it includes tools for individual states to modify the law to some degree by improving how it works at the local level. The main way this can be done is something called a "Section 1332 State Innovation Waiver":

Section 1332 of the Affordable Care Act (ACA) permits a state to apply for a State Innovation Waiver to pursue innovative strategies for providing their residents with access to high quality, affordable health insurance while retaining the basic protections of the ACA.

State Innovation Waivers allow states to implement innovative ways to provide access to quality health care that is at least as comprehensive and affordable as would be provided absent the waiver, provides coverage to a comparable number of residents of the state as would be provided coverage absent a waiver, and does not increase the federal deficit.

State Innovation Waivers are available beginning January 1, 2017. State Innovation Waivers are approved for five-year periods, and can be renewed. Waivers must not increase the Federal deficit.

In other words, the ACA itself allows for individual states to experiment to some degree...but only as long as those experiments are proven to do at least as good a job of providing quality healthcare coverage, to at least as many people, without costing either the enrollees or the federal government more than the "vanilla" ACA provisions otherwise would.

When done in good faith and according to the spirit of the ACA, this can result in positive results, such as the reinsurance programs which a half-dozen states have implemented over the past year or so. In those cases, 1332 waivers allow states to leverage the power of the ACA's federal dollars to multiply the impact of state dollars.

In other cases, states like Vermont and Colorado have tried to use 1332 waivers for even bolder experiments in achieving Single Payer healthcare systems at the state level. Unfortunately, every attempt has failed so far for various reasons.

The downside of 1332 waivers, of course, is that defining what counts as being "at least as good" is highly subjective...and much of this depends on the judgment of whoever is running things at HHS and/or CMS. Which, at the moment, happens to be Trump appointees Alex Azar and Seema Verma respectively.

That's what makes this morning's Big Announcement so concerning:

Trump Administration announces State Relief and Empowerment Waivers to give states the flexibility to lower premiums and increase choices for their health insurance markets

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.

Right off the bat they've replaced "Innovation" with "Relief" and "Empowerment" buzzwords in the title. "Increased choices" is also a red flag word, especially in the insurance market, since it usually just means "slicing and dicing up risk pools into smaller units, then throwing the higher-risk enrollees under the bus". This is precisely what the ACA itself was trying to get away from.

I don't have a lot of time to do a proper analysis of the new 1332 waiver rules myself, but folks like Dave Anderson are doing a pretty good job of it for me via Twitter. Here's his initial thoughts:

p.7 principal #1 will make #MedicaidBuyin proposals jump a higher barrier@colinb1123

— David Anderson (@bjdickmayhew) October 22, 2018

Here's what he's talking about:

  • Provide increased access to affordable private market coverage. Making private health insurance coverage more accessible and affordable should be a priority for a section 1332 waiver. A section 1332 state plan should foster health coverage through competitive private coverage, including AHPs and STLDI plans, over public programs. Additionally, the Departments will look favorably upon section 1332 applications under which states increase issuer participation in state insurance markets and promote competition.

Unless I'm mistaken, this translates as: Want to expand junky #ShortAssPlans? Awesome! Want to expand Medicaid? Fuck off!

P.9 bottom paragraph lets the Iowa Stopgap Measure of 2017 get through@bradwrightphd

— David Anderson (@bjdickmayhew) October 22, 2018

Here's the paragraph he's referring to:

Section 1332(b)(1)(C) requires that a state’s plan under a waiver will provide coverage “to at least a comparable number of its residents” as would occur without the waiver. By contrast, section 1332(b)(1)(A) and (B) merely state that the state’s plan will provide coverage that is as comprehensive and affordable as would occur without a waiver, but do not specify to whom such coverage must be provided. The 2015 guidance focused on the number of individuals actually estimated to receive comprehensive and affordable coverage, in effect reading the “to at least a comparable number of its residents” language from the coverage guardrail into the comprehensiveness and affordability guardrails as well. However, the Departments do not believe that the language or structure of the statute compels that reading.

Unless I'm mistaken, this translates as: Obama's CMS interpreted this as "it has to cover at least as many people at least as comprehensively and at least as affordably". Trump's CMS is interpreting this as "it has to be as comprehensive, but it doesn't have to cover as many people."

UPDATE: Actually, Margot Sanger-Katz seems to think it's the exact opposite:

This is wonky, but is actually a big change. The current rule is that coverage needs to be at least as comprehensive as it would be under Obamacare rules. The Trump admin is now saying that insuring more people matters more than insurance quality. pic.twitter.com/5RGWfxxB29

— Margot Sanger-Katz (@sangerkatz) October 22, 2018

The standard seems to be that, as long as ACA-compliant coverage is available for those who want it, states can encourage less comprehensive coverage options alongside it. pic.twitter.com/D83VxmiDwK

— Margot Sanger-Katz (@sangerkatz) October 22, 2018

Sanger-Katz notes that this is basically what last year's Cruz-Lee Amendment would have done...set up a bifurcated individual market, with high-priced, comprehensive policies for those earning less than 400% FPL and dirt-cheap junk plans available for those earning more than 400% FPL.

If you earn more than 400% FPL but also have a pre-existing condition, however, you're utterly screwed in this scenario.

P.10 allows states to offer Catastrophic/Copper plans

— David Anderson (@bjdickmayhew) October 22, 2018

Currently, most ACA-compliant individual market policies have to cover at least 60% of the enrollee's healthcare expenses (i.e., Bronze plans). There are four tiers of policies which qualify: Bronze (60% Actuarial Value), Silver (70% AV), Gold (80% AV) or Platinum (90% AV). There is one exception to this, however: Catastrophic Plans, which are kind of/sort of like Bronze plans (they do still have to cover all 10 Essential Health Benefits, have free preventative services and have to cover 3 primary care visits per year). Catastrophic plans are currently only available to people under 30 who also meet hardship/affordability exemptions. Catastrophic plans are cheaper than Bronze, but leave you holding the bag for the vast bulk of medical expenses in most cases.

I've had mixed feelings about allowing Copper plans to be added to the ACA exchange mix. I think it's a bad idea overall; the only reason I'm slightly open to it is if they were included as part of the ACA's single risk pool. If doing this brings in enough healthy people to improve the risk pool mix (thus lowering premiums for the other metal levels), I might be OK with it...but if too many people downgrade to Copper plans from the higher metal levels, you end up with everyone having what amounts to not-quite-junk-plans, which is what the ACA was trying to avoid in the first place.

(I have to leave for lunch, will have more later on this afternoon...)

UPDATE: OK, I'm back. Let's see, what other horrors await?

Looking at longer aggregate windows #1332guidance pic.twitter.com/Hmx92AF5gA

— David Anderson (@bjdickmayhew) October 22, 2018

looks like longer time horizon on deficit neutrality as well (current is year by year deficit neutrality) pic.twitter.com/PbTRiXU5Ks

— David Anderson (@bjdickmayhew) October 22, 2018

Here's what he's talking about:

The section 1332 guardrails generally should be forecast to be met in each year that a waiver would be in effect. However, the Departments will consider the longer-term impacts of a state’s proposal, and may approve a waiver even where a state expects a temporary reduction in coverage but can demonstrate that the reduction is reasonable under the circumstances, and that the innovations will produce longer-term increases in the number of state residents who have coverage such that, in the aggregate, the coverage guardrail will be met or exceeded over the course of the waiver term.

...Waivers must not increase the federal deficit over the period of the waiver (which may not exceed 5 years unless renewed) or in total over the 10-year budget plan submitted by the state as part of the application. We have revised the 2015 guidance to clarify that the ten-year budget plan should describe the changes in projected federal spending and changes in federal revenues attributed to the waiver for each of the ten years.

This basically gives the green light to the GOP's pie-in-the-sky "dynamic budget projections" in which they make fantastical assumptions about how awesome Trump's economic policies will be long-term, then use those projections as justification to do all sorts of crazy stuff today. Anderson doesn't seem too concerned about this, however:

agreed, but it is somewhat covered on P.21 and the incentive for rose colored glasses is a constant

— David Anderson (@bjdickmayhew) October 22, 2018

There seems to be one bit of potentially good news:

Major change in #1332Guidance https://t.co/2XJ3LcHHyf back-end can accommodate state changes now for 1332s with a new front end

good thing! pic.twitter.com/dF1udhEH2Z

— David Anderson (@bjdickmayhew) October 22, 2018

Basically, until now, if an individual state implemented certain types of changes to their ACA implementation (such as additional financial subsidies, as Massachusetts and Vermont have, for instance), they would have to have their own technological platform in order to do so; HealthCare.Gov wasn't capable of handling those customizations on a state-by-state basis. The new rules claim that HC.gov has been modified to be capable of handling that sort of thing:

A. Federally-facilitated Exchanges CMS operates the Exchange information technology platform (the federal platform) utilized by the Federally-facilitated Exchanges (FFEs) and some state Exchanges. Previously, CMS stated that the federal platform could not accommodate different eligibility and enrollment rules for different states. Since then, the federal platform has undergone technical enhancements necessary for the FFE’s operations that will enable it to support increased variation and flexibility for states that may want to leverage components of the federal platform to implement new models through section 1332 waivers. These improvements will include functionality that will enable states to work with private industry partners to create their own Web sites that could replace the consumer-facing aspects of HealthCare.gov for their state.

While this isn't necessarily a bad thing, the bit about "working with private industry partners to replace aspects of HC.gov" is another warning sign of the push to privatize the ACA as much as possible. Considering the data breach of the Direct Enrollment Pathway system which exposed private information about 75,000 enrollees just a week or so ago, this is about the worst possible timing for an announcement like this.

Here's Anderson's initial thought summary:

#1332Guidance first thoughts
1) It's a conservative technocratic policy
2) Idaho and Iowa plans are probably authorized
3) Enrollment and budget guardrails are loosened
4) Interactions with other programs counted for enrollment not money
5) Why so delayed?

— David Anderson (@bjdickmayhew) October 22, 2018

Yeah, that last question is definitely a head-scratcher. The timing of this makes zero sense to me, either policy-wise or politically: Policy-wise, the 2019 Open Enrollment Period contracts are already signed and locked in, with Open Enrollment having already started in California and starting in the rest of the country on November 1st...so I presume none of this would go into effect until January 2020 anyway. Politically, the midterms are coming up in just two weeks...and Republican candidates are already catching tons of heat for lying about supporting protections for coverage of pre-existing conditions.

That brings me to the biggest and ugliest change in these new rules:

Verma confirms that states could be permitted to use federal subsidy dollars to help people buy short-term health plans under a 1332 waiver.

— Margot Sanger-Katz (@sangerkatz) October 22, 2018

This...is quite a jaw-dropper, and makes it clear that the Trump Administration has zero compunction about even pretending to comply with the spirit or the letter of the Affordable Care Act. This change would allow public tax dollars to be used to pay for junk plans...one of the very things which the ACA was specifically designed NOT to allow.

The guidance seems to eliminate the current requirement that states must pass legislation to enact innovation waivers. Now, it appears, an executive order or regulation will be enough in most states. This mirrors the approach in last year's Obamacare repeal/replace bills. pic.twitter.com/dmL8QQU3xm

— Margot Sanger-Katz (@sangerkatz) October 22, 2018

...which just made it easier for a state with a Republican Governor to skip right over the objections of a Democratic legislature (like Illinois, for instance).

Of course, it would also theoretically make it easier for a state with a Democratic Governor to push waivers past a Republican legislature (i.e., Pennsylvania)...except that the waiver request still has to be approved by...Seema Verma.

Which means, in practice, that GOP Governors will likely get what they want, while Democratic Governors will be denied. Lovely. Oh, and there's this:

Nevertheless, the administration plans to count enrollment in short-term health plans as "coverage" for the purposes of the waiver calculation. Some details on what short-term plans do and don't cover here: https://t.co/Tvho0LIyTg pic.twitter.com/uLllYfZgvf

— Margot Sanger-Katz (@sangerkatz) October 22, 2018

Yes, that's right: Everyone with a #ShortAssPlan will now be considered to "have insurance coverage" as far as the Trump Administration is concerned.

There's a lot more, but as Dave Anderson put it:

IANAL but I expect billable hours

— David Anderson (@bjdickmayhew) October 22, 2018

Translation: Expect a lot more long, expensive, confusing lawsuits over the next year or two.

On the whole, Larry Levitt has a pretty good nutshell summary:

Republicans failed to repeal and replace the ACA last year. This new guidance from the Trump administration on state waivers continues a theme of trying instead to make end-runs around the ACA's rules.

— Larry Levitt (@larry_levitt) October 22, 2018

It's hard to overstate how much flexibility states will have under the Trump administration's new guidance for ACA waivers. This will likely widen the gap between red states and blue states for access, affordability, regulation, and protections for pre-existing conditions.

— Larry Levitt (@larry_levitt) October 22, 2018

Welcome to Trumpcare, everyone.