How Short Term Medical Benefits from ACA Waivers

Five Products that could benefit from new ACA waivers

The Trump administration wants states to consider more options when they try to improve their individual major medical insurance markets.

The Centers for Medicare and Medicaid Services is asking states to think about creating new subsidy programs for specific groups of consumers, personal health accounts, state subsidy programs and help with paying for niche insurance products.

CMS has included those proposals in a new discussion paper that talks about how states should use the Affordable Care Act Section 1332 waiver program — and suggested that, in some cases, states could use web brokers to implement waiver program proposals.

Related: New Trump policy lets states redirect ACA funding

CMS announced in October that it intends to expand the waiver program, and give the waiver program a new name: the State Relief and Empowerment Waiver (SREW) program.

ACA Section 1332 waiver program history

When Barack Obama was president, CMS called the Section 1331 waiver program the State Innovation Waiver program.

The Section 1332 waiver program gives states a chance to tailor their own versions of the ACA individual major medical programs and rules. In some cases, for example, a state might be able to find new uses for a portion of ACA premium tax credit money, or they might be able to replace a federal program with a state version of the program.

Hawaii used the Obama-era waiver program to bring back its old small-group universal health coverage program.

The Obama administration approved some states’ efforts to use the waiver program to set up state-run reinsurance programs for the individual major medical market. The Trump administration has approved several other Section 1332 reinsurance programs.

See the slideshow above for a look at five state Section 1332 reinsurance programs.

Under Obama, CMS developed regulations that set tight limits, or “guardrails,’ on Section 1332 waiver proposals.

Seema Verma, Trump’s CMS administration, has talked about wanting to make the waiver program rules more flexible.

In October, CMS said it wants to promote waiver program proposals that rely on private-sector solutions. CMS also said it could be flexible about coverage quality: The agency said that a waiver proposal should keep the number of people with coverage that complies with ACA benefits standards about the same, but that people with additional coverage could have less comprehensive coverage.

Waiver concepts

In the new discussion paper, CMS officials say they think states should be able to use the SREW program to propose four new types of health insurance market reform strategies:

  1. Account-based strategies. Verma may be warm this concept, because she herself developed an account that resembles a health reimbursement arrangement for some Medicaid enrollees in Indiana.
  2. State-specific premium subsidies: CMS has suggested that a state could tailor subsidies to get more young people covered or achieve other goals.
  3. Adjusted plan options: States could use this waiver concept to support use of products that don’t meet all ACA benefits requirements.
  4.  Risk-stabilization programs: States could establish new reinsurance programs, or, possibly, risk pools for people with health problems.

Where you could fit in

CMS officials emphasize in the discussion paper that a state would still have to comply with the ACA and deal with implementation concerns, such as figuring how to provide subsidies for products other than individual major medical policies sold through an ACA public exchange.

“One implementation option for states is to allow enrollment to occur directly with participating issuers or web broker websites,” officials say.

Small businesses already use that approach to sign up for small-group exchange plan coverage, officials say.

5 products that could benefit from the waiver concepts

Here are five types of programs that the discussion paper could eventually help:

  1. Short-term medical insurance: CMS suggests that a state could help pay for this product for some people.
  2. High-risk pool coverage for people with health problems: Before the ACA came along, many state high-risk pools were underfunded, offered weak benefits and had long waiting lists. CMS notes that, under ACA rules, a state could offer a high-risk pool through a waiver program, but that the high-risk pool would have to compete for the business of people with health problems. A state could not make people with health problems sign up for the high-risk pool plan.
  3. Association health plans (AHPs); CMS specifically mention that a AHP program could be part of a waiver proposal.
  4.  Value-based insurance design (VBID) plans: Designers of these plans try to offer richer benefits for what they believe to be higher-value care. CMS mentions VBID in the discussion paper.
  5. Health expense account (HEA) administrators: CMS suggests that, if a state offered ACA exchange plan users or others access to HEAs, the state could establish each HEA as a trust administered by a private financial institution on behalf of the beneficiary.

Resources

A copy of the CMS waiver concepts discussion paper is available here.

CMS has posted a summary of the discussion paper here.