1332 Waivers: State Flexibility to Improve and Stabilize the - - PowerPoint PPT Presentation

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1332 Waivers: State Flexibility to Improve and Stabilize the - - PowerPoint PPT Presentation

Nov 04, 2022 120 likes •419 views

The Texas Association

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  • The Texas Association of Health Plans

1332 Waivers: State Flexibility to Improve and Stabilize the Individual Market

October 11, 2017 PATI MCCANDLESS, VP STATE HEALTH POLICY Health Care Services Corporation

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  • Agenda
  • ACA Overview – 2014 Changes
  • Where do Texans get coverage?
  • What went wrong – why did carriers exit the market?
  • 1332 Waivers and State Flexibility – improving the

market

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Affordable Care Act – 2014 Big Picture Changes

  • Guarantee issue in individual market; no exclusions for preexisting

conditions; may not discriminate on the basis of health status

  • Individual and small group plans must cover Essential Health Benefits; rating

reforms (community rating; 1 to 3 ratio)

  • Premium assistance for health plans purchased on exchange (100% to 400%

FPL)

  • Medicaid expansion below 133% (optional for states)
  • Individual mandate – subject to tax penalty if fail to obtain coverage; hardship

exemption heavily used

  • Employer penalties
  • New Health Insurance Tax/Fees
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  • Source of Health Plan Coverage

49% 19% 14% 9% 7% 2%

National

50% 16% 11% 15% 6% 2%

Texas

Employer Medicaid Medicare Uninsured Nongroup/individual Other

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Source of Health Plan Coverage – Texas Stats

  • OR, put another way……
  • 50% of Texans are covered by their employer
  • 6% are covered by an individual health plan
  • 16% are covered by Medicaid or CHIP
  • 11% are covered by Medicare
  • 2% - other (Military, VA)
  • 15% - uninsured (down from 22% in 2013)
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  • Gap in Coverage for Adults in States that do not Expand

Medicaid under the ACA

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Texas ACA Snapshot as of 2/17

  • 963k Texans enrolled in exchange plans in 2017
  • Around 86% are eligible for APTCs
  • 604k Texans eligible for CSR benefits – 63%
  • Texas did not expand Medicaid; approximately 766k

Texans in the coverage gap

  • Texas Medicaid covers children, very low income

parents, pregnant mothers, elderly, blind, and disabled; does not cover childless adults

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Premium Costs for Individual Coverage

  • Texas premium for 40-year-old non-smoker 2017
  • $288
  • $88 after subsidy if income $30,000
  • Contrast with Texas High Risk Pool Average Monthly Premium in 2013

– $666

  • Texas pool created in 1997 – funded by insurer assessments and

member premiums – insurer for those with preexisting conditions

  • 2013 – covered 26k enrollees; $100M industry assessments
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Contrast with Premium Costs for Employer Coverage

  • 2017 average premium employer coverage
  • Individual
  • $6,690 per year OR
  • $557 per month
  • Family coverage
  • $18,764 per year OR
  • $1564 per month
  • 2017 employee contributions:
  • Individual – 18% of premium or $100 per month
  • Family – 31% of premium or $484 per month
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Industry Losses and Co-op Insolvencies

  • Industry losses in the billions
  • Most large national carriers exited the on exchange individual market – Aetna,

Cigna, United, Humana; regional carriers – Scott & White

  • Only 7 of 23 co-ops remain – Land of Lincoln in Illinois latest casualty; co-ops

in MD and NM filed suit against HHS due to issues with risk adjustment formula; no Texas co-op

  • 5 States have a single carrier in 2017 – Alabama, Alaska, Oklahoma, South

Carolina and Wyoming

  • Many rural areas across the country only have one carrier – BCBSTX was the
  • nly carrier in 95 Texas counties in 2017
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Why Did Carriers Leave the Exchange?

  • Industry wide steep financial losses in first 3 years -- the

marketplace did not perform as expected with fewer and less healthy enrollees

  • Experts expected the market to stabilize within 3 years, which is why

two of the risk mitigation programs -- reinsurance and risk corridors

  • - were limited to 3 years. Not clear how long it will take to

stabilize….

  • Reasons for the losses include higher-than-expected medical costs

and utilization and regulatory requirements that discourage continuous coverage

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What Went Wrong?

  • Transitional plans – “if you like your health plan, you can keep your health plan;”

11/2013 CMS guidance allowed for renewal of ACA noncompliant plans beyond 2014

  • Web site problems – the exchange web site failures delayed initial open

enrollment – many individuals did not enroll until late spring 2014; 2015 premium rates were required to be filed in May of 2014 without sufficient claims experience

  • Ongoing timing issues – 2016 was the first year plans had actual claims

experience on which to base rates

  • MLR – no incentive to price too high due to federal MLR requirements
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Requirements that Discouraged Continuous Coverage

  • Open Enrollment – now runs from 11/1 to 12/15 for 1/1 coverage; prior
  • pen enrollment was 11/1 through 1/31, allowing members to enroll for a

3/1 effective date and pay for 10 months of premium

  • Special Enrollment Periods (SEP) - Number/scope of SEPs, no

requirement for prior coverage, not validated prior to enrollment (presumptive eligibility)

  • Three Month Grace Period - 3-month grace allows members to

discontinue premium payments without cancellation; exchange allows re- enrollment without paying; 84% of Texas exchange enrollees are eligible for tax credits and subject to the 3-month grace period.

  • New administration NBPP rules tightened open enrollment and special

enrollment periods

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Other Issues

  • Third-party payment – provider-related charities paying for

premiums in the individual ACA market to enhance reimbursement (provider fee schedules typically higher than Medicare/Medicaid programs);

  • High ER costs and expansion of Free-Standing Emergency

Rooms

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  • 2018 Premiums Impacted by Continued

Uncertainty

  • CSR Funding – uncertainty around federal funding for cost

sharing reduction benefit (which covers copays for lower income enrollees 100 to 250% of FPL)

  • Individual Mandate – uncertainty around continued

enforcement of the individual mandate

  • 2018 Premium Impact – Kaiser Foundation reported:
  • CSR – 2 to 23% rate increase on silver plans
  • Individual mandate –1 to 20% rate increase

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  • A 1332 waiver allows states to request

permission to “waive” certain ACA requirements in the individual or small group market

  • 1332 waivers allow states to take action to

stabilize their individual markets and lower premium costs

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What is a 1332 Waiver?

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  • Exchange Requirements
  • Benefits and Subsidies
  • Individual Mandate
  • Employer Mandate

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What can be Waived under a 1332 Waiver?

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  • Section 1332 is very specific – only listed ACA provisions may be

waived

  • Fair market rules related to premium rates and prohibitions on pre-

existing conditions may NOT be waived under a 1332 waiver

  • ACA Guardrails:
  • Provide access to coverage for a comparable number of residents
  • Provide coverage as comprehensive as before the waiver
  • Provide access to coverage as affordable as before the waiver
  • Be deficit neutral – may not increase costs to the federal government

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What Can’t be Waived under a 1332 Waiver?

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  • There are federal regulations and guidance related to the 1332 waiver

process

  • In order to submit a waiver application, a state must:
  • Have state enabling legislation authorizing the waiver application
  • Hold public hearings and seek public comment on the waiver
  • Provide actuarial support that the waiver meets the ACA guardrails
  • Once received by CMS/CCIIO, the waiver application is posted for public

comments prior to a decision by the agency

  • CMS Waiver approval is for a 5-year period

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What is the Process for a 1332 Waiver Application?

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  • In March of 2017, HHS Secretary Price wrote to Governors and recommended

states consider 1332 waivers to stabilize their individual markets using state re- insurance programs

  • State re-insurance programs allow a state to receive pass-through federal

funding to reduce premiums in the individual market

  • Alaska was the first state to implement a state re-insurance program
  • Alaska 1332 waiver was approved in July 2017
  • Decreased premiums by 20% and increased enrollment by 1,460
  • $323M in funding over 5 years

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1332 Waivers and the Trump Administration

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  • Minnesota Waiver
  • State re-insurance program – 20% average rate decrease
  • Approved by CMS on 9/22/17
  • Basic health plan – funding glitch
  • Iowa Waiver
  • State re-insurance program
  • Significant changes to subsidies
  • Single Silver plan design
  • Oregon, Maine, Massachusetts…
  • Recent news regarding waivers…..

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1332 Waivers and the Trump Administration

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  • Oklahoma passed 1332 enabling legislation in 2016
  • Fall 2016/Spring 2017 – multiple stakeholder meetings to

discuss waiver options

  • Public concept paper published March 2017 with laundry list

including:

  • Envisioned multi-year waiver concept
  • State re-insurance program
  • Using a state-based exchange platform
  • Revising subsidies for 0% to 300% of FPL
  • Reducing benefit plans to 2 Silver plans

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Oklahoma 1332 Waiver

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  • Oklahoma passed legislation creating a state reinsurance

program in May of 2017

  • Oklahoma submitted waiver in August of 2017 to implement

state reinsurance

  • $325M in total state and federal funding to reduce the cost of

individual coverage

  • Waiver expected to reduce premiums by 34% and add 22,000

new enrollees to program

  • Withdrawn because of delay in CMS approval

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Oklahoma 1332 Waiver

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  • BCRA 1332 provisions
  • Repeal the guardrails related to coverage, affordability, comprehensiveness

and federal deficit neutrality. Instead, the bill would require the Secretary to grant a state's waiver if the application describes how the waiver would provide alternative ways to address these issues

  • Require the approval of any waiver as long as it did not increase the federal

deficit

  • Require the Secretary to establish an expedited review process
  • Extend waiver period from five years to eight years

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Congressional Efforts to Repeal & Replace ACA

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  • Graham-Cassidy
  • Did not make changes to 1332 waivers
  • Allowed a state to establish rules that allow issuers to offer coverage that does

not meet the following federal standards:

  • Essential health benefits
  • Cost-sharing limits
  • AV “metal” levels
  • Rating rules dealing with:
  • Age
  • Rating areas
  • Single risk pool
  • States cannot allow rating based upon gender or genetic information

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Congressional Efforts to Repeal & Replace ACA

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  • SB 2087 (2017) – allows TDI to create a temporary high risk pool or state

reinsurance program with federal stabilization funding if any; authorizes TDI to implement and apply for a 1332 waiver

  • SB 1406 (2017) – authorizes TDI to apply and implement a 1332 waiver

regarding small group plan actuarial values

  • SB 200 (2015) – TX Govt Code 531.451 allows HHSC operational plan to

include evaluation of 1332 state innovation waivers (among laundry list of provisions)

  • WHAT’S NEXT?
  • Monitoring federal activity around ACA
  • Planning and evaluation at the state level – what’s best for Texas?

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Texas 1332 Waiver Authority

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  • Source: New Yorker

Magazine

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  • Questions?

Thank You!

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