CMS to loosen ACA restrictions in state waivers

CMS and the Treasury Department have introduced new guidance on health insurance markets that will allow states to sell plans with looser restrictions.

The Trump administration recently expanded short-term health insurance plans, from the previous limit of three month to up to three years. These plans do not have to follow ACA requirements, meaning they may not offer protections for those with pre-existing conditions or provide comprehensive care.

While they may be cheaper, several lawmakers have called them “junk insurance” plans. The cheaper costs touted by CMS and the Trump administration also only refer to the price of a premium that an individual might pay under one of these short-term insurance plans.

The average monthly premium for a short-term, limited-duration plan in 2016 was $124 per month, compared to $393 per month for an unsubsidized individual market plan, according to HHS Secretary Alex Azar. Several healthcare advocacy groups have voiced their concerns of the administration’s latest steps to expand these plans.

However, if a consumer actually uses certain healthcare services, they may not be covered under their non-comprehensive plan, and they could end up facing significantly higher healthcare costs down the road for care and services received.

CMS said the new guidance will enable “innovative approaches” for states to develop new ways to make health insurance affordable.

“President Trump has already opened up more affordable, flexible options for Americans in the individual health insurance market, while also bringing new stability to the Exchange,” said Azar. “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.” 

The new guidance replaces the previous Obama-era guidance related to Section 1332 of the ACA on state innovation waivers, which permits states to apply to pursue “innovative strategies” for supplying high-quality, affordable health insurance coverage. These waivers previously had to retain the basic protections of the ACA and be at least as comprehensive and affordable.

The guidance takes specific steps to loosen restrictions under the previous guidance on waivers from 2015. Instead of focusing on the number of individuals estimated to receive comprehensive and affordable coverage, the new guidance focuses on the “availability” of comprehensive and affordable coverage. This allows states to offer different price points and benefit levels for health insurance.

“Adopting this more flexible interpretation of the section 1332 guardrails that focuses on coverage made available under the waiver will lower barriers to innovation and allow states to implement waiver plans that will strengthen their health insurance markets by providing a variety of coverage options,” the rule states.

The guidance also explicitly changes the previous guardrail to include short-term plans, which are “potentially less comprehensive than coverage established under the PPACA (Patient Protection and Affordable Care Act),” the rule states. States can count those with short-term coverage as insured under the new guidance. CMS maintains these options may be “more attractive to many individuals.”

Furthermore, Governors can pursue a State Innovation Waiver on their own, with existing state legislation that gives them authority.  

“This is a new day––this is a new approach to empower states to provide relief,” said CMS Administrator Seema Verma. “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.” 

The full guidance can be viewed on the Federal Register and will be published on Oct. 24, 2018.

The new guidance also comes as President Trump recently voiced "all Republicans support people with pre-existing conditions" on Twitter. In reality, the Trump administration has stated it will not protect pre-existing conditions in a lawsuit launched by 20 Republican Governors and state attorneys general that threatens to overturn the ACA in its entirety.