Yesterday, in an unusual Sunday afternoon announcement, the Center for Medicare and Medicaid Services (CMS) approved the Georgia Section 1332 waiver to completely alter their individual insurance market.
Georgia’s waiver has two main components. The first piece is a reinsurance program. This will mix state funds into the premium pool to pay for some high cost claims. This will lower premiums and then create a pass-through of federal premium subsidies. It is projected to reduce gross premiums by over 10%. This is meaningful to people who earn over 400% FPL. It won’t buy a lot of enrollment (<1%) but it helps middle and upper-middle class families. This is not an unusual waiver request. However, if the goal is to help families earning over 400% FPL, a better way would be to expand Medicaid and remove a large chunk of the most expensive portion of the ACA risk pool from the ACA risk pool.
I am not opposed to reinsurance waivers. I think there are implementation issues with almost all reinsurance waivers regarding risk adjustment as insurers can get effectively double paid without state specific risk adjustment factors. Double payment is a bad thing. It should be fixed. The Georgia waiver, similar in type but different in degree from Colorado, has significant geographic differences in payments to insurers. This is an invitation for insurers to dance the fine line between clever and fraud. It will also motivate several 2028 dissertations. But overall, the reinsurance portion of the Georgia 1332 waiver is well within normal bounds even if they are pushing the geographic splits really hard.
The big chunk of the Georgia waiver is the decision to scrap any centralized health insurance marketplace. Healthcare.gov and the state based marketplaces serve the states as a central source of trusted and complete information. Georgia, effective in 2022 for the 2023 plan year, will withdraw from Healthcare.gov and not fundamentally replace its shopping functions. Instead, individuals will be told to go find a broker or an enhanced direct enroller or go directly to insurers. These functions exist without a waiver, so I am having a really hard time seeing how the incentives change for brokers to sign up more people with a waiver than without a waiver. My research interests in the past few years has been on insurance choices (zero-premium, auto-renewal, plan domination etc) and the short lesson of that research agenda is that insurance choice is hard even when it is easy. I think that a lot of people will fall through the cracks and of the people who do not fall through the cracks, quality of choice will go down. I am having a hard time seeing how this waiver meets the enrollment guardrail. But CMS disagrees with me.