Health Care News

With New Guidance, Possible Changes to Health Insurance Marketplaces Loom

The Trump Administration recently issued new guidance that drastically changes the degree to which states can seek federal approval to make reforms to their health insurance marketplaces. Just as the country has entered the sixth open enrollment period, more changes to coverage options are likely to emerge in the near future as a result of this guidance.

By way background, there is a relatively small section of the Affordable Care Act (ACA), specifically Section 1332, that allows states to make potentially big changes to their marketplaces through waivers. Although a state cannot seek to waive the basic protections of the ACA, a Section 1332 waiver does provide the U.S. Departments of Health and Human Services (HHS) and the Treasury with the discretion to waive certain requirements of the ACA related to the health insurance marketplaces and the individual and employer mandates at the request of states. That discretion is where the Trump Administration’s new guidance becomes relevant.

Generally, Section 1332 waiver proposals must follow a standard state and federal review process that allows for considerable public comment and meet four criteria:

  1. Scope of Coverage;
  2. Affordability of Coverage;
  3. Comprehensiveness of Coverage; and
  4. Deficit Neutrality.

Due to the stringency of these requirements, very few waivers have survived past the proposal stage. In fact, since being made available in January 2017, only 8 states have received Section 1332 waiver approvals, 7 of which were focused on using federal pass-through funds to finance state-based reinsurance programs to stabilize their health insurance marketplaces and reduce premiums.

To further encourage state waiver applications, the Trump Administration’s guidance rescinds the previous Administration’s 2015 interpretation of the statutory guardrails and greatly reduces the limits on what and how states can request waivers under Section 1332. For example, the new guidance shifts away from a focus on whether coverage is available to a comparable number of residents to a focus on whether residents simply have access to comprehensive and affordable coverage. This shift directly reflects the Administration’s goals of promoting Association Health Plans and Short Term Limited Duration plans, which can avoid certain ACA requirements, such as protections for individuals with pre-existing conditions. Additionally, the new guidance allows a state to apply for a 1332 waiver without having to pass new authorizing state legislation. A state can now rely on existing laws, regulations or even executive orders to be able to submit its waiver application.

As the scope of Section 1332 waivers encompasses provisions directly affecting health centers as essential community providers, NACHC is reviewing the guidance to determine its effect on health centers and their communities. We will be reaching out to the field to seek feedback for possible comments. In the interim, please reach out to us at state@nachc.org with any questions.

2 Comments on “With New Guidance, Possible Changes to Health Insurance Marketplaces Loom

  1. In general this change makes it seem states will have more flexibility (and thus control) in approving waivers that would change circumstances in individuals state’s insurance markets. Is that accurate to say? So does this change anything for states that are on the federal insurance market?

  2. Hi Jessica. Thanks for asking your question. The new guidance aims to provide the states with greater flexibility in operating their health insurance marketplaces. However, the ability of a state to enjoy greater flexibility beyond what is currently in their scope under federal law would still require federal approval of a state’s Section 1332 waiver request. Section 1332 waivers apply to ACA compliant plans that are sold on both the Federally-Facilitated (FFM) and State-Based Marketplaces (SBM). For an example, Alaska has a FFM but was still able to make changes to the state’s health insurance marketplace using a 1332 waiver.

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