HHS Secretary Price encourages states to use ACA waivers for reinsurance, high-risk pools

While supporting the current proposal to repeal and replace the Affordable Care Act (ACA), HHS Secretary Tom Price, MD, encouraged states to submit more “innovation waivers” as allowed under the ACA to form their own reinsurance programs and fund pools to cover high-cost patients.

In a letter sent to governors across the country, Price said the goal is provide more flexibility at the state level, in accordance with President Donald Trump’s executive order to reduce the “regulatory burdens” under the ACA.

To achieve this, Price didn’t suggest changing the ACA, but rather encouraged states to make greater use Section 1332 of the law allowing for proposals for “State Innovation Waivers” to adapt some of the ACA’s requirements.

“To receive approval, the state must demonstrate that a proposed waiver will provide access to quality health care that is at least as comprehensive and affordable as would be provided without the waiver, will provide coverage to at least a comparable number of residents of the state as would be provided coverage without a waiver, and will not increase the federal deficit,” Price wrote.

He specifically mentioned Alaska’s waiver to extend a state-run reinsurance program, which had been supported by the American Hospital Association and former Healthcare.gov CEO Kevin Counihan. The state legislature had approved the $55 million reinsurance fund in June 2016 after several years of large premium hikes in a state with some of the highest health care costs in the nation. The subsidies are due to sunset after two years.

Alaska’s waiver asks for a $51.6 million in federal funds to support the program in future years. Price said other states can follow their lead, asking for funds for a reinsurance program to lower premiums or fund a state-run high-risk pool, an idea which Price supported as a member of Congress.

“If a state's plan under its waiver proposal is approved, a state may be able to receive pass-through funding to help offset a portion of the costs for the high-risk pool/state-operated reinsurance program. The amount of funding available will depend on state-specific circumstances,” Price wrote.