The Kasich-Hickenlooper ACA strengthening blueprint is out. It is a fairly straight forward document where the underlying message is that the ACA is not imploding nor is it excelling. It is muddling through. And that certain elements can be tweaked to improve things. I want to focus on the Section 1332 state innovation waiver section.
Many states view Section 1332 as an opportunity to strengthen health insurance markets while retaining the basic protections of the ACA. We recommend HHS streamline and coordinate the waiver submission and approval process, including an option for states to easily build on approved waivers in other states, and an option to fast-track waiver extensions. We also recommend HHS rescind its 2015 guidance on Section 1332 and clarify that states may combine waivers into a comprehensive plan and measure deficit neutrality across the life of the waiver and across federal programs.
The first section of increased administrative flexibility makes a lot of sense. Right now there are several states sending CMS 1332 waiver applications for reinsurance. Alaska has an approved reinsurance waiver. Minnesota and Oklahoma have submitted reinsurance waivers. Straight forward reinsurance waivers that are fundamentally behind the scene money shifting so that non-subsidized premiums are apparently lower are not particularly complicated. They should be approved quickly and analysis that other states used for isomorphic waivers should be allowed to be used as evidence.
The big chunk of heavy lifting is the last sentence regarding the 2015 guidance. This is a big ask. Right now, that guidance probably makes the Iowa waiver application without cost sharing assistance subsidies for people earning under 250% FPL an impermissible waiver.
However the guidance is very strict on how budget neutrality will be accounted for in the scoring of a waiver. Budget neutrality currently is scored only within the ACA and it must be achieved every year of the waiver so programs that save significant sums in Medicaid but have higher spending on the ACA would not qualify. Plans that require an initial first year investment but highly probable future year savings would not qualify.
It also does not include the impact of changes contingent on other Federal determinations, including approval of Federal waivers pursuant to statutory provisions other than Section 1332. Therefore, the assessment would not take into account changes to Medicaid or CHIP that require separate Federal approval, such as changes in coverage or Federal Medicaid or CHIP spending that would result from a proposed Section 1115 demonstration, regardless of whether the Section 1115 demonstration proposal is submitted as part of a coordinated waiver application with a State Innovation Waiver. Savings accrued under either proposed or current Section 1115 Medicaid or CHIP demonstrations are not factored into the assessment of whether a proposed State Innovation Waiver meets the deficit neutrality requirement. The assessment also does not take into account any changes to the Medicaid or CHIP state plan that are subject to Federal approval.
The K-H request is to allow far more comprehensive and integrated waivers that integrate ACA, Medicaid and CHIP programs into a coherent whole. This, to me, makes a lot of sense.
On first read, this is a reasonable set of suggestions on 1332 waiver flexibility where the final language on any revised guidance needs to be carefully read but overall, it is very promising.