The Biden administration gave its approval last week to Colorado’s new waiver under Section 1332 of the Affordable Care Act (ACA) to require premium reductions in a public options program, a plan unique and one of the few ACA forgoes innovation to venture beyond creating reinsurance programs. A second waiver, proposed by Washington, is also in the approval process, with a federal public comment period open until July 14.
Colorado waiver to reduce premiums and improve health equity
On June 23, the Department of Health and Human Services (HHS) and the Department of the Treasury approved Colorado’s Section 1332 waiver to require and enforce premium reductions and use transfer savings for grants from the state-based market. Colorado requested the waiver last year, in accordance with state law (HB21-1232). The waiver takes effect on January 1, 2023.
The waiver implements the Colorado Option, which makes a series of changes to health plans sold in individual and small group markets. First, it requires any operator offering a plan to also offer a standardized Colorado option plan, which must meet standards set by the state. Colorado Option plans must be sold both in the state Marketplace (Connect for Health Colorado) and off-Marketplace through the new Colorado Public Benefit Corporation.
Second, standardized plans must be designed to meet state health equity goals. To reduce health disparities, the law requires that standardized plans be designed to increase perinatal coverage and provide first-dollar pre-deductible coverage for primary and behavioral health services. The law also requires plans to meet network adequacy requirements with provider networks that are “culturally appropriate and, to the extent possible, reflect the diversity of [their] registered in terms of race, ethnicity, gender identity and sexual orientation. Colorado Option plan networks cannot be more restrictive than the non-standard plans offered in the state.
The waiver also authorizes the implementation of statutory premium reduction targets in the Colorado Option, with a supporting enforcement mechanism to ensure compliance. In 2023, premiums for individual and small group plans in a given county must be 5% lower than in 2021, adjusted for national medical inflation. This target increases to 10% in 2024 and 15% in 2025 (both relative to the 2021 baseline, with inflation), then from 2026 onwards bonuses must not exceed the employer’s bonus. previous year plus inflation. The state will use its rate review authority to enforce these limits. From 2024, if an insurer is unable to meet premium reduction targets, the Insurance Commissioner can hold rate hearings and, if necessary, is empowered to require providers to accept rates necessary to achieve the objectives of the plans, subject to certain limits.
These premium targets, combined with the state’s extension of its reinsurance waiver, are expected to generate significant premium reductions – approximately 22% to 32% over the term of the five-year waiver from the baseline. reference without waiver. This significantly reduces federal premium tax credit costs and translates into an estimated $1.5 billion in transfer funding that the state plans to use to support a new accessibility program.
The accessibility program will offer generous state subsidies, with final parameters determined based on available transmission and transmitter ratings. Individuals with an income between 150% and 300% of the Federal Poverty Level (FPL) who enroll through Connect for Health Colorado and are eligible for federal grants will receive state assistance to reduce their costs. State residents who are not eligible for federal bonuses, including undocumented immigrants, and who have incomes up to 300% of FPL are also eligible for state bonus and housing assistance. cost sharing. Rather than enrolling through Connect for Health Colorado, which is prohibited, undocumented individuals will enroll in Colorado Public Benefit Corporation mirror plans.
The state projects the waiver will increase enrollment by 10,000 in 2023 and about 32,000 by 2027, a 15% increase. The Biden administration’s endorsement of Colorado’s Section 1332 waiver may encourage other states to pursue public option proposals — as Washington did without capturing savings from a federal waiver and as Nevada intends to do so – and gives other states a plan to legislate and enforce premium reductions and to use the savings passed on for state-based market subsidies.
Federal comment period opens on Washington Section 1332 waiver
HHS and the Treasury are also accepting public comment on the Washington Section 1332 waiver. The waiver would allow undocumented immigrants to register through the state-based marketplace (Washington Healthplanfinder), which would make undocumented people eligible for state grants only and allow families with mixed immigration statuses to sign up for a health plan together in the marketplace. Comments are due July 14.
Under the ACA, undocumented people are not only ineligible for federal grants, but also ineligible to enroll in full-cost plans through the Marketplace. However, the provision prohibiting listing (Section 1312(f)(3) of the ACA) is among those that can be waived under Section 1332. Washington proposes to do so beginning in 2024.
This provision is part of Washington State’s broader market reform and subsidy program. In 2021, Washington launched new options in Washington Healthplanfinder by introducing its cascading care plans. There are two types of cascading care plans: Standardized Benefit Cascading Plans and Select Cascading Plans, which are standardized public option-type plans with provider reimbursement limits. Beginning in 2023, state grants called Cascade Care Savings will subsidize Washington residents with incomes at or below 250% of FPL who purchase gold or silver Cascade care plans and meet certain other eligibility requirements. Because these subsidies are only available for enrollment in cascade care plans, undocumented immigrants would be denied state subsidies without approval of this waiver. The amount of the state grant should depend in part on a person’s eligibility for federal grants, with state grants being higher for those ineligible for federal grants. The state has earmarked $5 million for those ineligible for premium tax credit prepayments. The exact amount of registrant subsidies has yet to be determined, pending the expiration or extension of the U.S. bailout premium tax credit enhancements. But even if the subsidy improvements end, people not eligible for federal subsidies, including undocumented immigrants, could see their monthly premiums cut nearly in half.
Other developments of the 1332 waiver
The Biden administration threatened in April to suspend Georgia’s waiver of leaving the federally-facilitated marketplace (HealthCare.gov) without creating a state-based marketplace unless the state takes certain corrective actions. . To comply with the administration’s request, Georgia must submit a plan by July 28 to bring its waiver into compliance with the statutory coverage guardrail in Section 1332, which requires the waiver to cover at least minus as many people who would be covered without it. Alternatively, Georgia can submit a written challenge to the government’s decision.
Reinsurance waivers have also been the subject of federal action. Maine’s application to claim reinsurance savings in a combined individual and small group market is pending approval, with its federal public comment period ending in April. In addition, several states have had their pass-through reinsurance amounts recalculated to account for increased federal subsidies available in 2021 under the U.S. bailout.
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