Monday, January 26, 2015

Arkansas Health Insurance Marketplace report examines 1332 waivers, potential tool for future reform

Posted By on Mon, Jan 26, 2015 at 2:49 PM

click to enlarge SANDERS: "To date, it's probably the most comprehensive analysis of 1332 waivers and what is possible."
  • SANDERS: "To date, it's probably the most comprehensive analysis of 1332 waivers and what is possible."
A report prepared for the Arkansas Health Insurance Marketplace (AHIM) examines potential options for the state under 1332 waivers, a feature of the federal Affordable Care Act which becomes available in 2017 and would allow states to waive certain rules or requirements of the federal health care law. A draft of the paper, which was produced in response to a request from AHIM Legislative Oversight Committee Chair Sen. David Sanders, was acquired by the Times via a Freedom of Information Act request. You can view the  draft of the report here. (AHIM is the non-profit state board created by a 2013 law to manage and implement a state-based health insurance exchange.) 

The use of 1332 waivers could be a key component of Gov. Asa Hutchinson’s plan for the future of health care in Arkansas, outlined in a speech at UAMS last week. Hutchinson proposed continuing the private option for two years through the end of 2016, and creating a legislative task force to look at alternative coverage options in 2017 and beyond. The task force may well aim to make use of 1332 waivers, which could give states more flexibility to tailor changes both to their Medicaid programs, to their healthcare exchanges (the regulated private marketplaces for health insurance created by Obamacare), and to empoyer-sponsored health insurance.

If you want to read more about 1332 waivers, see this fact sheet from the Arkansas Center for Health Improvement (ACHI — worth noting that ACHI Director and former Surgeon General Joe Thompson tweeted out the fact sheet as an avenue for "more innovation in health system" after Hutchinson's speech). The waivers could impact the private options's coverage expansion, but could also lead to eliminating or modifying the individual mandate requiring people to have health insurance, eliminating or modifying the employer mandate requiring large businesses to offer full affordable coverage to full-time employees, making changes to the benefits and subsidies available on the exchange, making changes to the types of plans which can be offered to the exchange, and other alterations. One review of 1332 waivers in the Journal of Health, Politics, and Law referred to them as “state innovation on steroids.” If Hutchinson wants an overhaul of the state’s healthcare system as a whole, a 1332 waiver will almost certainly be one of the tools he seeks to employ. The AHIM report offers some initial clues about what options Hutchinson's health care task force would have on the table. 

There are some limits: 1332 waivers have to maintain coverage at least as comprehensive as what was available on the ACA Marketplace; maintain coverage that's at least as affordable; and offer coverage to at least the same number of residents. It also must be deficit neutral to the federal government over ten years (the reforms can't cost more to the feds than the regular old ACA would have). All of these restrictions can have fuzzy lines and would have to be negotiated with the federal government.  

The report on 1332s was requested by the AHIM Oversight committee last July ( here is a copy of the letter from Sanders making the request, acquired by the Times from AHIM via an FOI request) and the most recent draft was completed on December 19. The report was prepared for AHIM by the Public Consulting Group (PCS), which has a contract with AHIM for plan management consulting. AHIM spokesperson Heather Haywood stressed that the report was a draft that has not been voted on or discussed, but it has been distributed to the AHIM board (including officials from DHS and the Insurance Department) and the legislative AHIM Oversight committee. (The very first page, as you can see, states "Draft: Do Not Distribute.") Haywood said that the purpose of the report was not to make any policy recommendations, but rather to form "a basis of information of what could be possible with a 1332 waiver." She added, "Certainly we anticipate that many more discussions will happen as Gov. Hutchinson moves forward with his health care reform policy." 

"It's not finalized and [a final version] will be released at a later date," Sanders said. "But I think it's a very comprehensive recommendation on possible paths for state innovation. To date, it's probably the most comprehensive analysis of 1332 waivers and what is possible. There hasn't been a significant amount of information out there. This is really the first of its kind." He added that while there were specific details about Arkansas, the report could serve as a "potential roadmap for any state." Sanders viewed the report as offering possible options but, he said, "Gov. Hutchinson is the one who is setting the tone for what's going to happen in terms of the push and the drive for both Medicaid reform and overall health insurance reform." 

The 68-page draft includes both information about the possibilities under 1332s and an overview of what would be required for the state to implement a 1332-based program. Specifically in regards to the private option, the draft imagines a couple of options. Again, to be clear, the draft makes no endorsements, but rather explores possibilities. 1) One scenario would use the existing private option model but make changes to the Marketplace to make the program more streamlined and comprehensive. Rather than Medicaid purchasing private plans available on the exchange, the program would negotiate with the Marketplace for plans specifically designed to fit the private option, tailored to be more cost-effective and more suited to serve the needs of the private option population.  2) Another scenario would use 1332s to pursue "consumer-driven reform." The medically needy would stay in traditional Medicaid, but everyone else in the current PO population would purchase their own private plans directly, rather than having Medicaid purchase the plans for them. In this scenario, people who make less than 138 percent of the federal poverty level would get significant subsidies to purchase private health insurance for themselves, just as moderate-income people do under the ACA today.

 "These are not the only two options, but set forward reference points in a continuum of options worthy of consideration," the draft report states. The report adds that pursuing these approaches "would involve negotiating a novel program approach with CMS and the IRS that breaks new ground in state health policy." 

Here's the executive summary's "three important conclusions" plus below a few more in-the-weeds details: 

1) Section 1332 Waivers give states broad latitude to design a health insurance marketplace that operates under a different set of rules than the Affordable Care Act. This is the case as long as the program alternative can be shown to provide as much coverage to as many people at no higher cost.

2) Section 1332 Waivers have the potential to redraw the boundaries among major health benefit coverage sources such the marketplace, Medicaid, and employer- sponsored health insurance. This appears possible because rules governing eligibility for marketplace premium assistance and reduced cost sharing may be waived under Section 1332. This is especially notable for Arkansas as it considers legislative renewal of the Private Option, among other possible healthcare access innovations.

3) It will be difficult to implement a program alternative authorized under a 1332 Waiver if planning does not begin in earnest in early 2015. This is the case given an implementation process that would involve passage of a state law, federal waiver approval, and establishment of comprehensive new business operations to run the program, all within the context of an Open Enrollment period for the state-based individual marketplace that would commence for plan year 2017 on October 15, 2016.

Beyond the private option, there are all sorts of other policy wrinkles that might be possible under 1332s. Remember, Hutchinson wants to "broaden the debate." Here's a bunch of options (again, not endorsements) mentioned in the AHIM draft, just to give you an idea of the range of possibilities: 

1) allowing carriers to participate on the Marketplace even if they don’t offer Silver and Gold plans, thus encouraging more carrier participation and competition; 2) employing catastrophic plans that don’t meet the essential health benefits requirements 3) changes to enrollment periods, the roles of brokers, or the ways that premium rates are set on the Marketplace 4) expanding the Small Group Health Options Programs (SHOP) to large businesses; 5) allowing employers to offer individuals tax-free vouchers for the purchase of individual health insurance on the Marketplace 6) making more people eligible for cost-sharing reductions on the Marketplace, “including allowing lower income people who are currently eligible for Medicaid to receive coverage and financial assistance through the marketplace.” 7) offering cost-sharing reductions to people for coverage outside of Silver level plans 8) allowing cost-sharing reductions to be administered through Health Savings Acconts (HSAs) 9) using cost-sharing subsidies to help make up the difference for inadequate employer-sponsored insurance for lower-income employees; 10) making more people eligible for subsidies to help them with the cost of insurance on the Marketplace 11) administering subsidies at the family level rather than individually 12) using subsides to help income-eligible people purchase unaffordable employer-sponsored insurance, rather than purchasing a plan on the Marketplace 13) exempting all or certain large businesses from the employer mandate or creating a lower penalty for employers providing access to “skinnier” coverage than currently permitted 14) exempting or lowering people who do not have health insurance from the individual mandate.



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