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.
Wag
Hickenlooper is a very smart businessman who has a good grasp of policy implications of legislation. He has been an excellent governor of our state, and has good potential as a national politician. If anyone can work out a bipartisan fix for the ACA, it’s him.
rikyrah
Obamacare’s popularity is at an all-time high, poll shows t.co/WIYZL6V1T0
— CBS MoneyWatch (@CBSMoneyWatch) August 30, 2017
Nougat
I’m usually concerned about healthcare waiver programs based on how they can be abused by people who are politically opposed to the program. But I wonder just how much competence the states are going to have to implement the broader, more exhaustive waivers that this proposal seems to envision. State departments of insurance aren’t exactly rolling in cash or eager to take on new responsibilities. Perhaps the politicians seeking these waivers will pay attention to throwing some additional money at their DOI. But even if they do, in many states Medicaid/CHIP isn’t part of the same agency as the DOI and there are considerable frictions in getting them to cooperate.
I also wonder how efficient this arrangement would end up if the states vigorously pursued these broad waivers. Right now there’s a single federal program that can bring to bear a lot of resources on the development of consumer assistance tools and the federal platform. I don’t see states pooling their resources (see: states not pooling resources to set up Exchanges after passage of ACA) nor do I think having 20-odd states doing slightly different things is going to be an improvement with respect to the fragmentation of the healthcare market.
I guess it just sounds like a political solution that will create an absolute operational nightmare. If all these waivers are just going to be used to fund reinsurance programs, wouldn’t we just be better off locking Rubio in a closet somewhere during this year’s budget negotiations so that the smart people can secure the federal funding that was promised for 3Rs programs?
I think most people who write on health policy can agree that any manipulations of the insurance markets are just shifting, rather than reducing, burdens. We can reduce the consumer premiums by throwing money at reinsurance programs but it’s not like the underlying cost curve has been moved at all. So if there’s no gain on pricing and operational issues abound, is the political solution really worth it? This feels like one of those instances where the GOP has decided that if they just move the work somewhere else (e.g. “let’s privatize and innovate!” or “states are laboratories!”), they’ll call it a win regardless of what actually happens on the ground.
But I definitely don’t know as much about insurance as you do David. Do any of these considerations move the needle for you or do you think they’re all nitpicks?
David Anderson
@Nougat: I agree with your first sentence; I am leery about destructive waivers and I am sucpiscious about the capacity of some states to administer complex waivers. But a complex waiver is something that California or Massachusetts could go to town on. They have the capacity and the will to get creative.
And yes, I agree with you that straight forward reinsurance waivers are most likely just moving money around and making apparent costs lower than actual costs. But if that brings in more healthy people who are not subsidized and/or buys political support, I am okay with that. Once there is wide spread political support and political ownership, then an assault on costs is plausible.
Nougat
@David Anderson: Both very good points. Appreciate the quick response!
quakerinabasement
As a Coloradan who has watched Hickenlooper’s career from the front row, I can tell you he is reliably reasonable. If Hick puts his name to something, you can be sure it’s thoughtful and in the interests of the people.
Fake Irishman
Agree with this quick analysis. The broader document is a good baseline for what we should be talking about for a stabilization bill.
Ohio Mom
@quakerinabasement: I wish I could say the same about my governor. His strongest talent is passing as way less conservative than he is. I usually do not trust him at all.
But I hold David in high regard so I am going to try exceedingly hard to have an open mind about this.
Rob in CT
So is this thing remotely politically viable? Or is this basically an early campaign whitepaper for The Johns 2020?
David Anderson
@Rob in CT: The politics are harder — I think the combination of the $192 billion cash infusion from not funding CSR into PPACA AND the growing realization from more Republicans that they own the political consequences of a clusterfuck in healthcare (among other things) makes passage of something like this a non-zero probability event
Nougat
@Rob in CT: My understanding is that they’d need a fair number of politically unlikely things to occur for this to ever pass through Congress. In the House, you’d need either a majority of Republicans to be on board to satisfy the Hastert Rule or you’d need Ryan to waive the Hastert rule which is unlikely. Then, of course, Ryan himself would actually have to bring the bill to the floor and get a majority of votes. In the Senate, you’d need 60 votes and you’d need Mitch McConnell to bring the bill to the floor. And that would have to occur without getting waylaid by POTUS antics. Then you’d need a POTUS signature which would probably be easier than the earlier procedural issues.
Taking any of these steps of course would likely restart the political insanity that accompanied the budget reconciliation attempts at ACA repeal. I think the GOP would rather move on than take the risk of more political blowback on healthcare for legislation that they wouldn’t be excited about passing at all. Juice < Squeeze and all that.
Nougat
@David Anderson: Did you see Seema Verma’s “anonymous” interview with a bunch of reporters in today’s NYT? It sounds like she’s more in the “do nothing” camp than the “let’s fix it” camp.