Maximizing the ACA Innovation Waiver: Biosimilar silver loading, anyone?

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Ask, and it shall be given

The advocates for more affordable health insurance at Families USA are asking the Biden administration to loosen up the Catch-22 that confronts states seeking to take advantage of the ACA's section 1332 innovation waivers.

1332 waivers enable states to propose alterations to virtually every feature of the ACA marketplace in pursuit of more affordable and effective coverage. The alternative scheme must cover at least as many people at least as comprehensively as the existing marketplace, and must do so without increasing the federal deficit. 

As currently interpreted, the deficit-neutral requirement presents a Catch-22: if the state's alternative scheme ends up costing more because more people sign up, the state is responsible for the excess costs, even if the coverage costs less (or no more) per person than the exiting ACA marketplace. 

We're in Cassidy-Collinsville, Chapter 2

Last March, Peter Suderman wrote a clever column claiming that Republican changes to the ACA -- repeal of the individual mandate, creation of a parallel ACA-noncompliant individual market -- were achieving the goals of the ACA repeal/replace bills. I noted the missing piece there: defunding the ACA, in particular the Medicaid expansion and Medicaid more generally. That was the "hot-beating heart" of the failed Republican repeal bills. Instead of AHCA- light, I suggested:

In the aftermath of the 2017 assault, the ACA resembles not so much a system established by a mainstream Republican repeal-and-replace bill as it does the kind of compromise that might have emerged from a negotiation over the Cassidy-Collins bill introduced in January 2017, if negotiation over such a plan had been possible (it wasn't, because no more than a handful of Republicans were interested in the bill).

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.

CMS guidance on ACA innovation waivers requires an ACA-compliant benchmark

The Trump administration has opened a new front in its assault on the ACA marketplace's protections for people with pre-existing conditions. This time the vehicle is the ACA's Section 1332 innovation waivers, which enable states to propose alternatives to the ACA's basic marketplace architecture to get their residents covered with affordable, comprehensive insurance.

In guidance issued this week, CMS relaxed strict standards that states have until now had to meet to get waiver proposals approved. Most radically, the new guidelines are designed to enable states to offer subsidies for ACA non-compliant plans, including short-term plans that are medically underwritten and don't have to cover the ACA's Essential Health Benefits.

Subsidizing noncompliant, medically underwritten health plans would seem to be a route to undermine the ACA-compliant market completely -- and potentially render comprehensive coverage unaffordable for subsidized as well as unsubsidized enrollees, especially those with pre-existing conditions.  But I suspect the guidance doesn't go quite as far as it seems to in this regard.  Some constraints on rendering comprehensive insurance unaffordable remain, I'll suggest below -- at least for subsidized enrollees.

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.”

Can states "repeal and replace" the ACA? Nicholas Bagley on the scope of the law's "innovation waivers"

There is a paradox in the power the Affordable Care Act lends to states to devise alternative means to meet the law's goals. On the one hand, the scope of the law's Section 1332 "innovation waivers" is sweeping: states can propose alternatives to the law's coverage rules, funding and subsidy formulas, and mechanisms for compelling participation, i.e., the employer and individual mandates.

On the other hand, the alternatives proposed in waiver applications must provide coverage "at least as comprehensive" as that defined by the ACA and protections against excessive out-of-pocket spending that render coverage at least as affordable as stipulated by the ACA. Waiver proposals must also cover "at least a comparable number" of the state's residents and must not increase the federal deficit.

Does the left hand's demand of equivalence take back the right hand's proffer of freedom of design? I posed the question to Nicholas Bagley, a health law scholar at the University of Michigan and  former appellate attorney at the U.S. Department of Justice who blogs about health law and policy at The Incidental Economist.