Congressional Democrats are trying to take away what little potential flexibility states have over their health insurance markets. If they are successful in their challenge to a new Trump administration rule, states will lose out on increased opportunities to use federal waivers for innovation in state health insurance markets.
Section 1332 of the Affordable Care Act allows states to apply for a waiver with the federal government to waive specific ACA requirements that pertain to individual health insurance markets. This was a bipartisan provision that governors wanted in the ACA for states to experiment with new ways to provide coverage for their population. As was the case with several other health care policies, the Obama administration effectively made it impossible for states to use this section of the ACA to design new health insurance markets for their state’s population. In October 2018, the Trump administration issued new guidance on section 1332 waivers to increase opportunity state-based reforms. The Trump administration’s guidance broadens the policy levers with which states could use to provide more affordable plans.
But now, congressional Democrats are attempting to limit the choice and flexibility that states have under section 1332. By using the Congressional Review Act — a law that allows Congress to reverse rules from the executive branch — Democrats have introduced a resolution that would roll back the increased flexibility granted to states by the current administration. The resolution was sponsored by Rep. Annie Kuster, D-New Hampshire, and Sen. Mark Warner, D-Virginia, and has the support of all 47 Senate Democrats.
Several states have applied for the waivers under Section 1332 of the ACA. Not all waivers are the same, and states have several options. The most common is a waiver to set up a reinsurance pool in the state. Reinsurance is essentially stop-loss insurance for insurance companies. Spreading risk like this allows insurance companies to lower premiums for everyone, since the higher-cost patients have an extra level of insurance for expensive claims.
Several states were able to implement successful reinsurance pools. Maryland was the most successful example, bringing down exchange premiums of up to 43%. Other states, such as Wisconsin and New Jersey, were similarly able to lower their exchange premiums by 10% and 15&, respectively. This is the kind of state innovation Congress is trying to take away.
One of the main concerns that congressional Democrats have is with the issue of pre-existing conditions. Many opponents of the new rules claim that the new 1332 guidance was an example of the Trump administration trying to take away protections for individuals with pre-existing conditions. But this is entirely untrue. The HHS Secretary doesn’t have any authority to waive anything relating to pre-existing conditions protections. Not only is it false that this rule is an attempt to take away protections for those with pre-existing conditions, but what will hurt patients more is taking away the state’s option to implement innovative health care solutions.
The rebuke of state innovation adds to a list of health care policies that were implemented by the Trump administration only to have those who disagree with the policies try to curtail them through legislation or the courts. Short-term, limited-duration plans and association health plans are facing the same fate. Yet what opponents of the current administration’s health care policies fail to realize is that not everyone in the country benefitted from the ACA. Many were left with higher premiums and fewer choices. Each of these newer policies was implemented with the goal of providing additional choices and lower prices.
In the face of rising premiums, unaffordable out-of-pocket costs, and diminishing choices, the current administration has made progress in extending alternatives to states and consumers. Section 1332 in the ACA was widely regarded as one of the ways states could innovate and find better solutions for more affordable health insurance. Democrats are now trying to take away an opportunity for states to use existing funding and reallocate it in a way that would provide more choices or lower premiums for patients.
This all comes down to the misguided view that Washington, D.C., is better equipped than an individual state to provide affordable health insurance plans to its residents. One of the crucial shortcomings of the ACA was the top-down approach to providing health insurance. The state’s innovation power was substantially decreased upon implementation. Congress shouldn’t do anything to take away the expanded flexibility that states now have under 1332 waivers.