Georgia Health News reports that the state of Georgia is pushing back their application for a 1332 reinsurance waiver for the ACA individual market from January 1, 2021 to January 1, 2022:

Georgia has streamlined its proposal to the feds for a waiver on health insurance rules, and has postponed its launch till 2022.

State officials cited “the unanticipated impact of COVID-19 on the state and its residents’’ in the announcement last week about the changes.

ACA reinsurance is a means to lower gross, non-subsidized premiums. There are lots of flavors of reinsurance but they all fundamentally work by introducing some source of non-premium dollars into the pool of money that pays claims. This means for a given claim level, premiums can be lower. The injection of non-premium dollars into the claim paying pool results in lower federal premium tax credit subsidy spending. That increment of federal money is then passed through to the reinsurance program. Different states make different choices as to how they operationalize this concept, but the concept is the same. Georgia’s choices are aggressive and big in scope as well as inviting people to dance on the thin line between legally clever and fraud.

I am only surprised that Georgia is the only state delaying or pulling back on their 1332 reinsurance waiver applications as I wrote at the end of May, 2020:

States are experiencing a massive revenue shortfall due to the COVID pandemic. State budgets have core priorities of education, medical care, criminal justice and civil courts, transportation, infrastructure and recreation on public lands. State budgets also have short run fixed costs of pensions and debt upkeep as well. After those expenses, other add-ons can be included.

One of the add-ons that about a dozen states have chosen to spend money is Section 1332 reinsurance waivers for the ACA individual market…

The waivers make insurance cheaper for individuals earning over 400% FPL and slightly more expensive for subsidized individuals who choose a plan that costs less than the benchmark plan. The marginal cost of insuring one extra person is fairly high.

States will have to make very hard choices in the next several weeks as updated revenue and expenditure projections come in. 1332 waivers can be either reduced or eliminated to free up the funding stream that went to the waiver. The freed up funds could be redirected to other, higher priority programs.

I am not surprised that Georgia is looking to delay a yet to be started program that would use very scarce general fund dollars in a year when there are very few general fund dollars. this is probably the least painful cut to make. I am slightly surprised that other states are not scaling back 1332 expenditures.