Friday, November 30, 2018

Do CMS's new "waiver concepts" violate even the new waiver guidance?

When HHS and the Treasury first took a meat axe to the so-called "guardrails" to ACA Section 1332 innovation waivers in late October, I argued that the guardrails were not down entirely.

Specifically, even as CMS Administrator Seema Verma actively encouraged proposals that would allow premium subsidies to be applied to short-term or other ACA-noncompliant plans, a state would still have to use an ACA-compliant plan, or something very like it with guaranteed issue, to set the benchmark by which subsidies are calculated.

That's the case (I think) in spite of -- or maybe because of -- the shift in the new guidance from requiring waiver proposals to cover as many people as comprehensively as the ACA to merely making comparably affordable and comprehensive coverage available to as many people. Here's the key language:
The Departments may consider these guardrails met if access to coverage that is as affordable and comprehensive as coverage forecasted to have been available in the absence of the waiver is projected to be available to a comparable number of people under the waiver.
As I further noted, under the new guidance it's still true that
Comprehensiveness is defined by the extent to which coverage meets the ACA's essential health benefits requirements. Affordability "may generally be measured by comparing each individual's expected out-of-pocket spending for health coverage and services to their income."
Ergo:
If coverage meeting such standards has to be available, it pretty much has to be tied to a benchmark plan in an ACA-compliant market, or something comparable.
It was a somewhat weedy post that included discussion of just how much the new guidance might allow "vulnerable populations" to be harmed (as in, 'this will only hurt a little'...). But now that the next shoe has dropped, I want to float the core premise above once more.

This week, CMS released four template "waiver concepts, " three of which seem to establish an 'anything goes' rule. States can 1)  "direct public subsidies into a defined-contribution, consumer-directed account that an individual uses to pay for health insurance premiums or other health care expenses" -- a catch-all HSA; 2) "create a new, state-administered subsidy program" that might (by implication) change age-rating or extend subsidies to higher incomes, among other things; and 3) allow subsidies to fund ACA non-compliant plans.

The catch-all HSA structure in particular is free-form and leaves a lot of work to states. But the new guidance, equivocal as it is, remains. The fact sheet laying out the waiver concepts specifies:
As with all waiver requests, a state must ensure that the waiver plan meets the four statutory guardrails relating to comprehensiveness, affordability, coverage, and federal deficit neutrality. Nothing in the new guidance or the waiver concepts changes the requirements for health insurance issuers to provide protections for people with pre-existing conditions. 
And so I want to ask those with more experience/expertise with statutory and regulatory language once more [see update at bottom]: does the requirement to make coverage that's comprehensive by ACA standards available to as many people as in the current ACA marketplace not require subsidies that enable those who want/need such coverage to buy it with an ACA-mandated percentage of their incomes -- or at least something close to it?

It may be that the new "waiver concepts" invite abrogation even of the guidance CMS issued five weeks ago, itself ripe for legal challenge,  let alone the ACA statute.  If that's the case, then even that guidance may invite legal challenge of proposals shaped according to these templates.

UPDATE, 12/8: Joel McElvain, a former Dept. of Justice lawyer who participated in the defense of the ACA in the two cases that reached the Supreme Court, has since argued in detail that the October guidance violates the ACA's statutory language. He also, almost as an aside, affirms the thesis advanced here:
There is, at a minimum, substantial doubt as to whether some of the concepts that HHS described in the discussion paper could meet even the agencies’ newly-announced interpretation of Section 1332; it is questionable whether state residents would continue to have access to the same level of comprehensive, affordable health coverage under a waiver that siphons off healthy people from the risk pool, as HHS appears to be contemplating.     

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