Iowa submitted a Section 1332 State Innovation Waiver to the Center for Medicare and Medicaid Services (CMS) yesterday. It is the biggest and most complex waiver yet to be submitted. It is an invitation to long and costly lawsuits because of how it uses CSR funding. Other states have submitted reinsurance waivers where they are …
Iowa’s 1332 waiver and CSR populationsPost + Comments (7)
(b)Granting of waivers
(1)In general The Secretary may grant a request for a waiver under subsection (a)(1) only if the Secretary determines that the State plan—
(A) will provide coverage that is at least as comprehensive as the coverage defined in section 18022(b) of this title and offered through Exchanges established under this title 2 as certified by Office [3] of the Actuary of the Centers for Medicare & Medicaid Services based on sufficient data from the State and from comparable States about their experience with programs created by this Act and the provisions of this Act that would be waived;(B) will provide coverage and cost sharing protections against excessive out-of-pocket spending that are at least as affordable as the provisions of this title 2 would provide; [my emphasis](C) will provide coverage to at least a comparable number of its residents as the provisions of this title 2 would provide; and
(D) will not increase the Federal deficit.
So what does “provide coverage and cost sharing protections against excessive out of pocket spending that are at least as affordable…” actually mean?
The current operative combined Section 1332 guidance issued on 12/16/15 from the Department of Health and Human Services and the Department of the Treasury lays out how they interpret Section 1332’s requirements that coverage and cost-sharing must be measured:
Affordability refers to state residents’ ability to pay for health care and may generally be measured by comparing residents’ net out-of-pocket spending for health coverage and services to their incomes. Out-of-pocket expenses include both premium contributions (or equivalent costs for enrolling in coverage), and any cost sharing, such as deductibles, co-pays, and co-insurance, associated with the coverage. Spending on health care services that are not covered by a plan may also be taken into account if they are affected by the waiver proposal. The impact on all state residents is considered, regardless of the type of coverage they would have absent the waiver. This condition generally must be forecast to be met in each year that the waiver would be in effect.
Waivers are evaluated not only based on how they affect affordability on average, but also on how they affect the number of individuals with large health care spending burdens relative to their incomes.
The Iowa waiver submission will increase the number of low income residents with high percentages of their income devoted to health care costs. The hypothetical 40 year old who has an expensive chronic condition will see a dramatic change in his total out of pocket spending from 8.52% of income under the ACA to 44% of income under the new Iowa proposal. That is, in my mind, a meaningful difference in aggregate affordability of care for this individual.
There will be a number of individuals who will have significant, real and obvious harms from this waiver. I will be shocked if at least one of them does not file suit to stop the Iowa waiver for at least the 2018 plan year.