Breaking the BHP ring fence: New York's Hochul proposes Essential Plan eligibility to 250% FPL

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This significant tidbit, gleaned from New York Governor Kathy Hochul's State of the State Address, was reported in yesterday's Politico Pulse newsletter:

...Hochul proposed raising income eligibility for New York’s Essential Plan — which provides health insurance to New Yorkers who don’t qualify for Medicaid — from 200 percent of the federal poverty level to at least 250 percent, pending federal approval. The policy is estimated to reduce the number of uninsured New Yorkers by at least 14,000 and make health care more affordable for at least 92,000 people.

This initiative is not mentioned in the published text of Hochul's speech. I can't find any further written trace of it.  To extend eligibility beyond the current 200% FPL income threshold would appear to require the filing of a state ACA innovation waiver requesting federal approval.  [Update: this language is in the State of the State Book, page 34. The NY Dept. of Health confirms that the state will have to submit an innovation waiver proposal, and adds that there will be more detail in the executive budget proposal.]

If the proposal pans out, it could pave a state route to essentially replacing -- at least in large part -- the ACA marketplace with a program more cost-effective for enrollees and governments alike.

Blue waivers! Synthetic silver loading, anyone?

First the bad news: Seema Verma's CMS has invited states to undermine guaranteed issue and comprehensive coverage in their ACA marketplaces, floating four "waiver concepts" that converge on one idea: subsidizing medically underwritten, lightly regulated insurance.

Now the good news: CMS has invited states to be creative. Blue states might think about taking up the offer to redesign the ACA marketplace subsidy structure. Those states, however, will want to stay within the statutory "guardrails" for ACA Section 1332 innovation waivers that recent Trump administration guidance seeks to, um, wave away: provide coverage as comprehensive and affordable to as many people as does the existing marketplace design, without increasing the federal deficit.

The financial constraint -- deliver better benefits without spending more money -- has rendered Section 1332 something of a Catch-22 for states aiming to maintain a private market in which plans offer comprehensive coverage without regard to applicants' medical history.

But Trump's October 2017 cutoff of direct  reimbursement of insurers for Cost Sharing Reduction (CSR) and the resulting "silver loading" -- pricing CSR into silver plans only, since CSR is available only with silver plans -- has created a windfall that might be leveraged if CMS plays by Section 1332 rules. (See note below if you're unfamiliar with how silver loading works.)

Silver loading has inflated subsidies as well as premiums and created discounts in bronze and gold plans benefiting some two million enrollees, boosting enrollment and partially offsetting other forms of Trump administration sabotage. CBO estimates the cost to the Treasury at $194 billion over ten years. But the benefits have been haphazard and inefficiently distributed. Via waiver, perhaps a state could make better use of its share.

ACA innovation waivers: a need for speed? Not so fast, says Emma Sandoe

For all the relative comity of the Senate HELP Committee hearings on legislation to strengthen the individual market for health insurance (Sept. 6, Sept. 7), a potential battle line of sort was drawn on Tuesday in statements by the chair, Lamar Alexander, and ranking member, Patty Murray. As the Times' Robert Pear reported:

“To get a result,” Mr. Alexander said, “Democrats will have to agree to something — more flexibility for states — that some may be reluctant to support. And Republicans will have to agree to something, additional funding through the Affordable Care Act, that some may be reluctant to support. That is called a compromise.”

The senior Democrat on the panel, Senator Patty Murray of Washington, said: “Threading this needle won’t be easy. But I do believe an agreement that protects patients and families from higher costs and uncertainty, and maintains the guardrails in our current health care system, is possible.”

ACA marketplace remake: Iowa leverages Wellmark's warm cooperation

This week the Iowa Insurance Division formally filed an ACA innovation waiver request to radically remake the state's individual market for health insurance.

The plan is cast as an emergency stopgap for a market said to be collapsing -- facing a 53% average requested rate increase for silver plans from its sole remaining insurer. The waiver submission forecasts a loss of 18-22,000 unsubsidized enrollees should the plan not be implemented.

The basic tradeoff in the proposal, dubbed the Iowa Stopgap Plan, seems to be to exchange Cost Sharing Reduction (CSR) subsidies for reinsurance and a more generous premium subsidy structure, which makes subsidies available to enrollees at all income levels and yields lower net premiums to almost all comers. Harsh as the loss of CSR for enrollees under 200% FPL would be, the repurposed dollars seem to yield a disproportionate dividend in premium reduction.

CMS's warmup for AHCA-world: Guidance on ACA innovation waivers

CMS recently issued guidance to states seeking ACA Section 1332 "innovation waivers," by which states can apply to alter or even thoroughly redesign their ACA marketplaces.

The checklist offers explicit encouragement to states to seek federal funding for reinsurance programs or high risk pools:

In particular we welcome the opportunity to work with states to pursue Section 1332 waivers incorporating a high-risk pool/state-operated reinsurance program. State-operated reinsurance programs have a demonstrated ability to help lower premiums, and if the state shows a reduction in federal spending on premium tax credits a state could receive Federal pass-through funding to help fund the state’s reinsurance program. 

Encouragement to states to implement a reinsurance program is good news, as reinsurance does keep down premiums, and the expiration of the ACA's federal reinsurance program after 2016 contributed to the 2017 premium spike. Including the high risk pool (HRP) option is a bit of a mystery, since 1332 waivers cannot be used to waive the ACA's ban on medical underwriting or guaranteed issue. (The waivers can be used to alter the ACA's Essential Health Benefits required of all qualified health plans, as well as subsidy formulas and the individual and employer mandates.)

Tom MacArthur's faith-based waiver for the AHCA

Representative Tom MacArthur, R-NJ, has taken the lead in advancing amendments to the AHCA designed to bring both the Freedom Caucus and the moderate Tuesday Group aboard.  For the moderates, MacArthur writes that there will be an additional $160 billion in funding over 10 years to increase tax credits for older buyers and preserve Medicaid coverage for new mothers (was that on the block?!) and addiction treatment. For the conservatives, an amendment has been published  that would allow states to opt out of prohibiting medical underwriting or requiring insurers to cover the ACA's Essential Health Benefits.

Actually, the amendment begins by purporting to restore EHBs, community rating and guaranteed issue, the prohibition on denying coverage or charging more to people with pre-existing conditions. But it then tacks round and enables states to seek "limited waivers" to amend the EHBs, community rating -- and medical underwriting, if the state establishes a high risk pool.

How are those waivers limited? There's the rub. Beginning in 2017, the Affordable Care Act enables states to seek waivers to change the structure of their ACA marketplaces, but requires that the state's alternative plan "provide coverage that is at least as comprehensive and affordable, to at least a comparable number of residents, as this title would provide; and that it will not increase the Federal deficit."