House to vote this week to cancel out Trump's 1332 Waiver "re-definition" sabotage

Last fall I wrote about Yet Another Sabotage Attack® on the ACA by the Trump administration, this time in the form of CMS Administrator Seema Verma completely warping the entire point behind the 1332 Waiver provision. Here's the backstory:

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.

Cut to last fall:

New insurance guidelines would undermine rules of the Affordable Care Act

The Trump administration is urging states to tear down pillars of the Affordable Care Act, demolishing a basic rule that federal insurance subsidies can be used only for people buying health plans in marketplaces created under the law.

According to issued Thursday by federal health officials, states would be free to redefine the use of those subsidies, which have since 2014 provided the first help the government ever has offered consumers to afford monthly insurance premiums.

States could allow the subsidies to be used for health plans the administration has been promoting outside the ACA marketplaces that are less expensive because they provide skimpier benefits and fewer consumer protections. Even more dramatically, states could let residents with employer-based coverage set up accounts in which they mingle the federal subsidies with health-care funds from their job or personal tax-deferred savings funds to use for premiums or other medical expenses.

As I noted at the time, this is complete garbage. The whole point of ACA subsidies in the first place is that they're supposed to be used specifically for ACA-compliant policies...which are expensive without subsidies BECAUSE OF THOSE ADDED PROTECTIONS AND BENEFITS.

The new advice, called “waiver concepts” because they are ideas for how states could get federal permission to deviate from the law’s basic rules, stray from both of those goals. And it would allow states to set different income limits for the subsidies — higher or lower than the federal one.

The prospect of setting a higher income limit for subsidies may sound like a good thing on the surface (aren't I the one always imploring Congress to raise/remove the 400% FPL eligibility cap, after all?)...except that 1332 waivers also don't allow for higher overall federal spending, which means raising the cap to, say, 500% would also mean shrinking the amount of the subsidies everyone receives at lower levels. Alternately, it might mean also raising the lower-bound threshold from 100% to 200% or whatever, leaving low-income enrollees out in the cold.

What else?

  • 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;

"Plan options that best meet their needs" is a big red flag. This likely goes right back into the whole "I'm a man so I don't need maternity coverage!" or "I'm not crazy so I don't need mental health coverage!" debate, which of course completely misses the point of how risk pools work in the first place.

  • 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;

Short-term plans, of course, are often junk and can discriminate against those with pre-existing conditions, which completely negates the first bullet point.

As an aside: Insurance carriers have to pay a "user fee" in order to offer healthcare policies on the ACA exchanges, generally between 1.0 - 3.5% of the unsubsidized premiums depending on the state and exchange, which goes to fund the operations of HealthCare.Gov, Covered California, NY State of Health and so forth. In return, they're supposed to be getting a "walled garden" marketplace where they won't be at risk of being undercut by non-ACA compliant junk plans.

The ACA exchanges exist for two reasons: First, because the logistics of determining eligibility for tax credits requires a website which interfaces directly with the IRS, NS and other federal databases; and second, so there's a place to run an unbiased apples to apples comparison between ACA-compliant healthcare policies, where visitors know that every plan listed is fully ACA compliant.

If junk plan carriers can start hawking their wares as being "ACA subsidy eligible!", it amounts to ACA-compliant carriers effectively being forced to pay to promote their competition.

  • 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;

In other words: Throw 1,000 sick people under the bus in order to lower premiums for the other 99,000 people...which is the exact opposite of how insurance risk pools are supposed to work.

...and so forth.

The bottom line is that the Trump Administration's 1332 waiver "redefinition" would be a terrible thing which would make a complete joke out of the ACA exchange and subsidy structure.

The good news is that House Democrats are scheduled to vote on a simple bill which would nip this move in the bud:

HOUSE DEMOCRATS TEE UP VOTE TO NEUTRALIZE TRUMP OBAMACARE ACTIONS: After giving backers of the Medicare for All Act a hearing in the House last week, leadership is now turning its attention toward quickly advancing bills to protect and extend Obamacare.

The House will vote later this week on the first of several Obamacare bills that are expected to pass in May but are not expected to make it past the lower chamber. The party is working to demonstrate its differences from Republicans, who failed to repeal the healthcare law and most of whom won’t work to block the Trump administration’s actions. The measures are also set up to bring along Democrats who would prefer more sweeping changes to the healthcare system, by arguing that it’s more urgent to show they are addressing Obamacare now, when the Trump administration is asking for the law to be thrown out in court.

The bill receiving a vote later this week is titled the Protecting Americans with Preexisting Conditions Act. Its main focus is to block the Trump administration’s guidance about 1332 waivers.

Here's the full text of the bill itself (H.R. 986):

A BILL To provide that certain guidance related to waivers for State innovation under the Patient Protection and Affordable Care Act shall have no force or effect.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the “Protecting Americans with Preexisting Conditions Act of 2019”.

SEC. 2. PROVIDING THAT CERTAIN GUIDANCE RELATED TO WAIVERS FOR STATE INNOVATION UNDER THE PATIENT PROTECTION AND AFFORDABLE CARE ACT SHALL HAVE NO FORCE OR EFFECT.

Beginning April 1, 2019, the Secretary of Health and Human Services and the Secretary of the Treasury may not take any action to implement, enforce, or otherwise give effect to the guidance entitled “State Relief and Empowerment Waivers” (83 Fed. Reg. 53575 (October 24, 2018)), and the Secretaries may not promulgate any substantially similar guidance or rule.

That's the whole thing: The "re-definition" from last October is null & void, and no similar "re-definition" can be placed into effect in the future, period.

The bad news is that, as noted in the article, there's pretty much no chance of the bill making it through the Senate, and it would obviously be vetoed by Trump if it got to him anyway, seeing how it's his own "re-definition" in the first place.

On the upside, it doesn't sound like anyone's biting at this anyway...not even the red states, for a pretty ironic reason:

But so far, states don’t appear as enthused about using 1332 waivers in the Obamacare-ducking ways CMS has suggested. North Dakota is the latest state to seek such a waiver, but it’s to create a reinsurance program, not to buck ACA requirements.

...Now Verma is trying to nudge states along. Last month, CMS held a meeting at HHS’s Humphrey Building with state officials and other stakeholders to discuss how states could use waivers under the new guidance to retool their marketplaces. And on Wednesday, the agency issued a request for information to collect additional ideas for how these waivers could be used, beyond the specific scenarios it has laid out.

...But the states most likely to apply for the waivers — those led by Republicans critical of the ACA — generally aren’t running their own marketplaces, instead relying on Healthcare.gov. It could be more challenging for these states to design marketplace changes along the lines of what CMS has described, said Jennifer Tolbert, director of state health reform for the Kaiser Family Foundation.

“They will also take time for states to develop and may require states to assume more financial risk, which may explain why no state has yet submitted a waiver application under the new guidance,” Tolbert told me.

Making alterations along the lines of what the 1332 waiver "redefinition" allows requires a whole mess of technical and financial changes...and those really can't be done on the federal exchange, since they can only be done by the request of individual states. That means states have to either operate their own full exchange platform or at the very least have their own legal exchange entity.

Right now only 12 states operate their own ACA exchange platform, plus five more which have their own exchange entity but still rely on HC.gov as their technical platform. Of those 17 states, only Arkansas, Idaho and Kentucky are likely to try and jump on something like this...and even there, Arkansas (which never really did much with their exchange in the first place) appears to have eliminated theirs altogether, although I'm a bit fuzzy on exactly what the status of it is today.

Of course, three more states are breaking off of HC.gov in the next year or two...but those include Nevada, New Mexico and New Jersey, each of which is trying to strengthen ACA protections, not weaken them. That really leaves just Idaho and Kentucky...and possibly not even Kentucky, since they're piggybacked on HC.gov these days after scrapping their own perfectly good "kynect" exchange a couple of years ago.