On Friday, March 23, 2018, Congress faces an important deadline to pass an omnibus budget bill to avert a government shutdown. Measures to bolster states’ Affordable Care Act (ACA) markets are currently not in the bill, but a group of lawmakers have proposed an amendment that could strengthen and stabilize insurance markets.
Sens. Lamar Alexander and Susan Collins and Reps. Greg Walden and Ryan Costello released legislative language earlier this week that includes several significant provisions, including allocation of more than $30 billion to fund state reinsurance or high-risk pool programs.
A Congressional Budget Office analysis of the bill estimates the funding would decrease premiums on average by 10 percent in 2019 and 20 percent in 2020 and in 2021. Under this plan, middle-income consumers (earning more than 400 percent of the federal poverty level-FPL) would experience the greatest gains from the reinsurance/high-risk pool program. However, an accompanying analysis suggests the bill would lead to coverage losses due to consumers earning between 200 and 400 percent of FPL dropping their coverage as a result of federal funding for the cost-sharing reduction (CSR) program, which offers smaller federal subsidies for health insurance for this population.
Below is a summary of the major components of the Alexander-Collins-Walden-Costello proposal.
Reinsurance/High-Risk Pool Funding
- Federal funding for a reinsurance or high-risk pool program. The program would allocate $10 billion per year from 2019 to 2021 to states to operate a reinsurance or high-risk pool program, and $500 million in 2018 to cover the costs of creating the program. The program would exist under ACA’s Section 1332 waiver authority, but exempts the program from budget neutrality and state matching requirements typically associated with 1332 waivers. The proposal gives states latitude to define their high-risk pool or reinsurance program, but authorizes the US Department of Health and Human Services (HHS), in consultation with the National Association of Insurance Commissioners (NAIC), to determine how funds should be allocated to states. HHS will operate a federal default program in states that do not pursue their own reinsurance or high-risk pool program. It also provides an expedited 45-day approval process for states seeking 1332 waivers to establish their program.
Changes to ACA’s 1332 Waiver Program
- Streamlines administrative procedures for 1332 waivers. Extends flexibility by allowing states to pursue waivers if they secure certification from their governors (rather than securing state legislative approval.)
- Loosens affordability standard for 1332 waivers. Changes the requirement that coverage under a 1332 waiver must be “as least as affordable” as coverage under the ACA. Instead, it establishes that coverage be of comparable affordability for low-income individuals, individuals with serious health needs, and other vulnerable populations.
- Loosens budget neutrality requirements. Instead, mandates that the waiver should not increase the federal deficit over the term of the waiver and over the 10-year budget plan submitted in conjunction with the waiver application. It also provides flexibility so that HHS may consider the budgetary effects on other federally-funded programs (e.g., Medicaid) in assessing budget neutrality requirements.
- Expedites waiver approvals: Shortens the time during which HHS must approve or deny a waiver from 180 to 120 days. Provides an expedited 45-day approval process for emergency waivers (where states are at risk of excessive premium increases or bare counties) and copycat waivers (waivers substantially similar to that approved in another state).
- Extends the waiver approval period. Allows HHS to approve waivers for up to six years (as opposed to five) and allows waivers to be approved for additional six-year periods.
- Limits suspension of waivers. Ensures that HHS cannot suspend or terminate waivers prior to the end of the waiver period unless the state has materially failed to comply with the terms of the waiver.
- Requires HHS to develop model waiver language. Within 60 days, HHS must develop model waivers that could include plans to establish a reinsurance program or invisible high-risk pool, expand insurer participation and access to affordable plans, encourage value-based insurance design, and provide varied health plan benefit designs.
- Eliminates all 1332 regulations and guidance issued prior to the enactment of this proposed law.
Funds the Cost-Sharing Reduction (CSR) Program
- Appropriates funding for CSRs from 2017-2021. The appropriation would cover costs incurred under the CSR program from Oct. 1, 2017, through Dec. 31, 2021. Insurers would only be eligible for CSR payments in 2018 if the insurer did not otherwise increase its premiums to account for elimination of program funding. (Read more about CSRs.)
Extend Availability of Catastrophic (Copper) Health Plans
- Removes restrictions on catastrophic health plans. Eliminates restrictions barring individuals older than age 30 from purchasing catastrophic health plans.
- Merges catastrophic enrollees into a single risk pool. Ensures that catastrophic enrollees are included as part of the individual markets single risk pools.
Invests in Marketplace Marketing and Outreach
- Dedicates federal funds for federal marketplace outreach and enrollment activities. Dedicates $105.8 million collected from marketplace issuer fees for outreach and enrollment activities in 2019 and 2020. HHS may give grants to states for the purposes of fulfilling these activities.
- Requires reporting on enrollment and outreach programs. Requires HHS to issue biweekly enrollment reports during the 2019 and 2020 open enrollment seasons. Requires HHS to issue annual summary reports on Navigator performance and advertising and outreach activities conducted for in 2019 and 2020.
Regulations Related to Multi-State Compacts
- Requires NAIC to issue regulations under Section 1333 of the ACA. Section 1333 allows states to form “health care choice compacts” under which insurers would be permitted to sell qualified health plans to consumers in any state participating in the compact.
Short-term Limited Duration Plans
- Requires consumer education about limitation of short-term plans. Requires state insurance commissioners to require short-term plan insurers prominently display the fact that short-term plans do not meet the coverage and benefit requirements of ACA-qualified health plans in marketing materials, contracts, and application materials.
- Codifies state legislative and regulatory flexibility over short-term plans. Establishes that states may regulate short-term plans as long as state regulations do not interfere with federal requirements.