The Centers for Medicare and Medicaid Services, which implements the health law, released four templates detailing how states may use waivers. States will get significantly more leeway to change the way they distribute and structure ACA premium subsidies that now go to almost nine million people.
“The specific examples laid out today show how state governments can work with HHS to create more choices and greater flexibility in their health insurance markets, helping to bring down costs and expand access to care,” said Health and Human Services Secretary Alex Azar.
The flexibility being offered to states marks a fundamental shift in approach, health analysts say. The Obama administration sought to make sure people had a minimum level of coverage, while the waivers show the focus now is on making sure people have access to some kind of coverage.
ACA supporters say that amounts to giving states and insurers a license to provide inadequate coverage. It undermines the ACA’s intent of providing eligible consumers with financial help to purchase plans that provide certain standards.
“These new templates are nothing more than a how-to guide for health-care sabotage,” Sen. Patty Murray (D., Wash.) said Thursday. “The Trump administration is brazenly warping a tool meant to help states innovate and lower prices so it can further gut protections for people with pre-existing conditions and drive up health-care costs.”
Under the new approach, states can let consumers use their premium subsidies under the ACA to buy cheaper health plans that don’t comply with the law or offer some benefits such as maternity care. They can funnel public subsidies into defined-benefit accounts that consumers can draw from for their own health-care costs.
CMS in October announced new guidance on waivers, replacing guidelines from the Obama administration. The specific templates released Thursday show the administration is pushing ahead with actions that will allow and even encourage states to go in their own direction on health care. The waiver concepts are to be used as a springboard for innovation, CMS Administrator Seema Verma said Thursday. She said waivers that allow states to initiate defined contributions for health costs would restrain premium growth.
That approach will likely increase the divide between states that retain the health law and those looking to roll it back. And it sets up a clash with Democrats, who plan to use their midterm-election wins to protect the ACA from the administration’s moves to weaken it.
The Brookings Institution, a left-leaning think tank, released a paper this week saying the administration sidestepped rule-making on the change, an argument that could pave the way for legal challenges.
Ms. Verma said Thursday that states need more freedom from the ACA’s centralized health-care arrangement.
“Seeing the problems the ACA created, and seeing the lack of federal action to address these problems, should be proof enough for why it was such a mistake to federalize so much of health-care policy under the ACA,” she said.
Democrats have been asking the Trump administration to halt initiatives that unwind the health law, and they blame Republicans for a tepid pace of sign-ups during the current ACA open enrollment season. Sens. Lamar Alexander (R., Tenn.) and Ms. Murray have said they are interested in reviving legislation to help stabilize the individual insurance markets.
“The administration should better look at their situation and do the opposite of what they have been doing,” Sen. Bill Nelson (D., Fla.) said on the Senate floor Wednesday. “I ask the American people to demand that the Trump administration stop undermining the ACA. We should be working together in a bipartisan way to make the ACA work better, not trying to kill it.”
As part of the newly flexible approach, states can restructure the distribution of tax credits that help reduce the cost of premiums, giving them to consumers who now earn too much to be eligible. Almost nine million people who paid for health plans on the exchanges in 2018 received tax credits.
Since Republicans in Congress failed to repeal the ACA, the administration has worked over the past year to undo its central tenets. The health law set minimum standards that must be met by plans on the individual ACA market, but the administration relaxed limits on plans that offer pared-down benefits and don’t cover pre-existing health conditions.
The administration also has allowed states for the first time to impose work requirements on Medicaid. President Trump ended billions of dollars in payments to insurers to offset the required subsidies that they must provide for out-of-pocket health costs. And Republicans in Congress repealed the penalty, starting in 2019, on people who don’t have coverage.
The waivers have the potential to be one of the most decisive factors in letting states go separate ways on health care. Some are likely to keep the current system, where premium tax credits go to consumers who buy ACA-compliant plans on the exchanges, while others may upend much of that system altogether.