New guidance issued Monday loosens restrictions states face to waive Affordable Care Act (ACA) requirements. These types of waivers, known as Section 1332 waivers, are currently allowed under the ACA, but this guidance would allow them to go much further. For example, the guidance would allow states to promote health plans, such as Association Health Plans and Short-Term, Limited-Duration Plans, that don’t require the same level of coverage as the federal health law, including charging higher premiums for people with pre-existing conditions.
“States know much better than the federal government how their markets work. With today’s announcement, we are making sure that they have the ability to adopt innovative strategies to reduce costs for Americans, while providing higher quality options,” Centers for Medicare and Medicaid Administrator Seema Verma said in a statement.
According to The Hill, states will be allowed to offer plans with much less comprehensive coverage in what critics have called a “parallel” insurance market. Experts say this market will be more attractive to younger, healthier people.
Worse yet, the guidance would allow states to apply federal taxpayer dollars to offset premiums for substandard insurance, further syphoning off healthy individuals and increasing premiums for people with pre-existing conditions in the marketplace.
“The Trump administration looks like it’s willing to aggressively test the boundaries of the law when it comes to waivers. Whether that’ll stand up in court is very much open to question,” Nicholas Bagley, a health law professor at the University of Michigan Law School told Kaiser Health News.
Another proposed rule would allow employers to fund tax-exempted health reimbursement arrangements to help pay for workers' individual health insurance premiums, undoing Obama-era guidance that restricted HRAs for that purpose.
The proposed rule would also allow employers that offer traditional group health coverage to fund an HRA of up to $1,800 per year to reimburse employees for certain medical expenses, including stand-alone dental benefits or premiums for short-term insurance plans.
In a commentary for The Wall Street Journal, Alexander Acosta, Steven Mnuchin, and Alex Azar write that “Americans should have more options than one plan their employer selects for them. And they should be able to maintain their insurance when they change employers or exit the job market to raise a family or care for a sick loved one.”
Critics say the new policy could cause employers to put their more expensive, less healthy employees into the ACA marketplace, while steering healthy employees to cheaper, non-ACA insurance.
The National Health Council is evaluating the proposed rules and will provide comments to the Administration.