HHS Offers Waivers for Health Insurance Exchange Stability

March 14, 2017 - The Department of Health and Human Services (HHS) recently encouraged states to apply for State Innovation Waivers as a way to stabilize the health insurance exchanges and boost consumer access health plans and services.

States should particularly consider submitting waiver proposals that contain high-risk pool and state-operated reinsurance programs, Tom Price, MD, HHS Secretary shared in the letter to state governors.

“States need the flexibility to develop innovative healthcare models that will improve patient access to care, increase affordability and choices offered, lower premiums, and improve market stability,” Price stated in a press release. “Today’s letter highlights State Innovation Waivers as opportunities for states to modify existing laws or create something entirely new to meet the unique needs of their communities.”

The Affordable Care Act implemented the State Innovation Waiver initiative to allow states to develop their own solutions to health insurance exchange challenges that best suit their population’s needs. Through the initiative, the HHS Secretary can waive the following:

• Part I of Subtitle D of Title I under the Affordable Care Act on establishing qualified health plans

• Part II of Subtitle D of Title I of the Affordable Care Act on consumer choices and insurance competition in the health insurance marketplaces

• Internal Revenue Code Section 36B and Affordable Care Act Section 1402, relating to premium tax credits and cost-sharing reductions for plans sold on the marketplaces

• Internal Revenue Code Section 4980H on employer shared responsibility

• Internal Revenue Code Section 5000A on individual shared responsibility

The waiver proposals, however, must earn HHS approval and the federal department requires that waiver programs provide consumer access to high-quality care that is “at least as comprehensive and affordable as would be provided without the waiver.”

The programs must also “provide coverage to at least a comparable number of residents of the state as would be provided coverage without a waive, and will not increase the federal deficit.”

HHS added that high-risk pool and state-operated reinsurance programs operated under the state innovation waiver initiative may be an effective method for achieving three health insurance goals of the initiative: lowering premiums, increasing market stability, and expanding consumer choices.

As an example for state governors, Price offered Alaska’s reinsurance program and extension proposal. The state developed the program in response to initial health plan rate information for 2017 that revealed that premiums may rise by 42 percent in the individual market.

Based on the estimates, Alaska implemented a state-operated reinsurance program in 2017 to combat rising premium prices. The program’s legislation gave the state authority to appropriate funds from different premium taxes to stabilize the state’s individual health insurance market.

Through the program, 2017 health plan rates only increased by 7.3 percent, according to the state waiver submission. The state also estimated that the program would boost individual market enrollment by 1,650 individuals.

To build on the state’s reinsurance program, Alaska applied for a State Innovation Waiver. As part of the waiver proposal, the state asked HHS to approve a high-risk pool state-operated reinsurance program for 2018 and beyond.

“Alaska plans to stabilize the individual market by using the funds to totally or partially reimburse the insurer for incurred claims from high-risk residents,” the state’s waiver submission stated.

In the letter to state governors, Price mentioned that HHS is currently reviewing Alaska’s waiver submission and plans to work with the state on approving and implementing the program.

He pointed out that all state waiver proposals must go through a public notice and comment period prior to HHS approval. The period may include public hearings to “ensure a meaningful level of public input” is received.

Although, the public scrutiny of health insurance exchange stability proposals may be financially worth it for states. Price added that states may receive pass-through funding if the waiver proposal is accepted by the federal department.

Funding will depend on state-specific needs as well as potential federal spending reductions associated with marketplace financial assistance that the program generates.

HHS intends to release a checklist in the next couple of weeks to help states apply for a waiver.