In broad strokes, the bipartisan deal from Senators Alexander and Murray would restore cost-sharing payments through 2019 in exchange for some amendments to the rules governing ACA waivers. Now that we have the bill text, we can start to wrap our hands around the practical effects of those waiver changes.
Most importantly, the bill would relax one of the guardrails governing state waivers. In its current form, section 1332 of the ACA requires any waiver to include cost-sharing protections that are “at least as affordable” as those in the ACA. Under the new bill, the waiver would just have to provide “cost sharing protections against excessive out-of-pocket spending that are of comparable affordability, including for low-income individuals with serious health needs, and other vulnerable populations.”
To my eyes, that’s a pretty modest change. The category of waivers with cost-sharing protections that are “of comparative affordability” to those in the ACA, but are not “at least as affordable,” is tiny. The new language may signal that HHS could approve waivers where the states would offer protections are slightly less robust than what we’ve already got under the ACA. But that’s it.
There’s been some talk that the language change might allow the approval of Iowa’s waiver. I don’t see it. As I understand it, Iowa wants to undo cost-sharing protections for its residents.* [See the update below; Iowa’s position has softened from its original waiver proposal.] How is an absence of cost-sharing protections the same as “cost sharing protections … that are of comparable affordability” to those in the ACA? I’ve explained before that the decision to grant a waiver can be challenged in court. If Iowa’s waiver wasn’t viable before, it won’t be viable even if the Alexander-Murray bill becomes law.
Apart from the guardrail change, the bill would require HHS to decide on waivers within 90 days, not 180 days, which should speed processing. Of particular relevance to Iowa’s waiver, the bill also creates an expedited approval pathway of 45 days for “urgent situations.”
What’s an urgent situation? It’s one where the Secretary determines that all or part of a State is “at risk for excessive premium increases or having no health plans offered.” But there’s less than meets the eye here. An urgent waiver isn’t automatically granted when that time has elapsed: the Secretary still has to approve an urgent waiver before it can take effect. The default is still “no.”
Of perhaps greater significance, the bill would prohibit HHS from yanking a state waiver for six years “unless the Secretary determines that the State materially failed to comply with the terms and conditions of the waiver.” That last clause means that, if a state’s waiver is approved, the next Secretary of HHS can’t terminate the waiver—even if it turns out that the waiver doesn’t comply with the guardrails.
It’s not hard to see how that change might make a difference if a Democrat takes office in 2020. Still, it’s a far cry from changes to the waiver rules in previous Republican bills, which would have outright prohibited HHS from terminating waivers for eight years, however recklessly or foolishly states spent their ACA money.
Finally, the legislation would undo HHS guidance and regulations pertaining to waivers. The Obama administration, for example, declined to allow states to package their 1332 waivers with Medicaid waivers, and use savings from one waiver to offset an increase in spending from the other. The field would be clear for the Trump administration could revisit that. Then again, the Trump administration could have revisited those Obama-era rules anyhow, so I can’t see why vacating the regulations and guidance makes much of a difference.
All in all, the changes to the waiver rules are real but minor. To borrow from Hamilton, it looks like Senator Murray got more than she gave, and wanted what she got.
* Update: David Anderson has pointed me to an October 5 revision that Iowa made to its waiver request that would extend cost-sharing protections to individuals up to 200% of the poverty line (the ACA affords protection up to 250%). With those protections in place, Iowa says that people up to 150% of poverty “will not see an increase in their out-of-pocket costs,” and that people between 150% and 200% of poverty will have a “lower average total cost of care,” taking into account premiums and out-of-pocket spending. Those in the 200% to 250% range won’t receive out-of-pocket protections.
Are Iowa’s revised cost-sharing protections comparably affordable to those under the ACA? The protections are certainly thinner, and for people in the 200% to 250% range, nonexistent. Whether that package as a whole is “comparable” is a question of degree: I can see an argument either way. Which is to say that the revised Iowa waiver might be approved under the new standard, but I wouldn’t be surprised to see a lawsuit over any such approval.