Every chance we get, we try to remind clients that with just three tools – Section 1332 of the ACA, Section 1115 of the Social Security Act and Section 3021 of the ACA – the Trump administration could radically alter the health care delivery and financing systems.
Yesterday, while everyone who was not preparing for Stella (read: health care wonks, reporters and analysts) sat refreshing the Congressional Budget Office’s website to download the score on the American Health Care Act of 2017, HHS Secretary Tom Price sent a letter to America’s governors.
The letter is essentially a call for waiver applications that could be considered within the 180 day period specified by law or under and “expedited basis.” Originally envisioned as a way to bring a single payer system to states that wanted it, Section 1332 is written broadly enough to also permit states to restructure the ACA within their borders.
Specifically the following provisions of the ACA can be waived under Section 1332:
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Establishment of Qualified Health Plans
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Consumer Choices and Insurance Competition Through health Benefit Exchanges
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Premium Tax Credits and Cost-sharing Reductions for Plans Offered within Marketplaces
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Individual and Employer Mandates
In other words, Section 1332 permits waiver of the critical operative sections of the law that the public knows as Obamacare.
Section 1332 also permits pass-through funding to the states for support of these waivers. Pass through funding would permit the federal government to essentially bundle up all the money that would be used for Medicaid expansion and exchange enrollees and send it to the individual states to administer their own DIY Affordable Care Act.
The state would have to meet certain requirements. The waiver must:
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Provide for coverage that is at least as comprehensive as the ACA
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Provide coverage and cost-sharing protections against excessive out-of-pocket spending that are at least as affordable as those under the ACA
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Provide coverage to at least a comparable number of residents as the ACA
These restrictions are subject to interpretation but do need to be certified by the HHS Office of the Actuary. If the American Health Care Act or something like it were to pass, these requirements would be reduced and permit even more flexibility.
The prospect will probably get state Medicaid officials a little excited. The expectation after passage of the ACA and in the wake of rules established by the Obama Administration was that Section 1332 waivers would largely be available to states who wanted to move toward health care financing solutions embraced by the Obama Administration.
For example, Colorado voters had the option to vote for a single payer system on the November 2016 ballot that, if approved, would have paved the way for a Section 1332 waiver. It was defeated. California submitted a Section 1332 waiver to permit enrollment in Medi-Cal and Covered California undocumented immigrants. They withdrew it after the election. Meanwhile, Texas Ohio and Oklahoma passed legislation that enabled their states to file Section 1332 waivers but have yet to file requests probably because they did not think the waiver would be granted.
Yesterday’s letter lets states know that the Trump Administration stands ready to listen to their ideas. States, especially those without robust provider systems, fiscal capacity and dense populations, have been fantasizing about modernizing their programs for years. It remains to be seen, what they may wish to consider but some of the ideas that have been percolating for a few years and likely to come forward are:
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Bridge programs that would allow Medicaid beneficiaries to move seamlessly from their Medicaid Managed Care Organization to a managed care plan supported by premium assistance thus ensuring access to similar provider networks and coordinated care.
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Programs to increase flexibility in insurance benefit design.
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Programs that stabilize insurance premiums like those that use reinsurance.
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Greater use of episode or bundled payments in Medicaid.
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Resolution of coverage gap in non-expansion states.
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Reconsideration of how hospitals are compensated for charity care.
The timing of the letter is important. State legislatures are wrapping up their sessions in the next eight weeks. Those that have not already done so would need to pass enabling legislation to empower their Governors to submit the proper paperwork.
Call with questions. We are still a little snowed in and would welcome the conversation.
Emily Evans
Managing Director
Health Policy
@HedgeyeEEvans
