‘Difficult needle to thread’ on ACA fix with easier state waivers

Members of the Senate Health, Labor, Education and Pensions (HELP) Committee were encouraged to offer greater flexibility under the Affordable Care Act (ACA)’s “state innovation waivers,” the details of which could spell trouble for the fledging compromise between Democrats and Republicans on a quick fix for the law.

The third in a series of HELP Committee hearings—with the goal of reaching a consensus on a bill by the end of the week—focused on Section 1332 of the ACA, which allows for states to waive requirements of the law to experiment with different models of health coverage. ACA provisions like premium tax credits, insurance exchanges, essential health benefits and the individual and employer mandates can be altered under these waivers.

Under President Barack Obama, however, HHS offered a limited scope for these waivers, with applying states having to demonstrate their plans wouldn’t lead to fewer people being covered, premiums increasing, benefits being reduced or higher federal spending.

Those restrictions are too tight, according to HELP Committee Chairman Lamar Alexander, R-Tennessee, noting that only a handful of states had applied for waivers, including Alaska and Iowa. He suggested many ways to speed up the process, like allowing faster approval when one state’s application largely matches what’s already been approved for another state.

What Alexander doesn’t want, he emphasized, is a return to some of the policies included in earlier Republican proposals to replace the ACA, like removing protections for people with pre-existing conditions.

“The guardrails that need examination are the severe restrictions on benefit design,” Alexander said. “That’s where we need to have further discussion.”

Witnesses at the hearing agreed on the need for greater leeway in these state waivers. Former HHS Secretary and Utah Gov. Mike Leavitt suggested offering a “menu of waivers” for changes the agency would have already examined and approved so states can have requests approved more quickly, like the reinsurance program which has already been approved for Alaska. He also suggested allowing tying together state innovation waivers with Section 1115 waivers which deal with changes to Medicaid programs.

Allison Leigh O’Toole, CEO of Minnesota’s health insurance exchange, MNSure, has already worked on a reinsurance waiver for her state, which she noted has yet to be approved by HHS. While she also welcomed the talk of additional state flexibility, she said individual insurance market needed stability directly from the federal government, like guaranteed funding of cost-sharing reduction (CSRs) subsidies to insurers and a long-term, federal reinsurance program.

“A state-only funded program is unsustainable in the long run,” O’Toole said.

A longer list of suggestions was offered by Bernard Tyson, chairman and CEO of Kaiser Permanente. Beyond funding CSRs, reinsurance and state waivers, he said a stabilization plan would need to include continued enforcement of the individual mandate, a repeal of the health insurer tax and rolling back the Trump administration’s cuts to ACA enrollment outreach and navigators.

With those provisions, he said major insurers which have left the ACA markets over recent uncertainty will return.

“You don’t have to take my word alone, call them directly. I did,” Tyson said. “I recommend, for example, that you call my friend and colleague Joe Swedish, CEO of Anthem and Mark Bertolini, CEO of Aetna.”

Both Aetna and Anthem have made large-scale departures from ACA markets in dozens of states, leading to many counties have only one insurer participating in their exchanges—and in the case of 63 cities and counties in Virginia, none.

All of these proposals were suggestions for a bill which lawmakers want to pass by the end of month, as insurers have to finalize contracts to participate in the federal Healthcare.gov exchange by Sept. 27. The ranking Democrat on the committee, Sen. Patty Murray, D-Washington, acknowledged it’s a “difficult needle to thread,” but also warned her party wasn’t going to compromise on areas it feels would make coverage less comprehensive and less affordable.

“This has to be a conversation about moving forward, not backward,” Murray said.