By Joel McElvain
The Affordable Care Act reformed the individual health insurance market to protect persons with pre-existing conditions. Insurers who participate in this market must sell plans with a standard set of comprehensive benefits, and may not deny coverage to, or impose higher premiums on, persons with pre-existing conditions.
Through legislative, regulatory, and litigation efforts, the Trump Administration has sought to depart from the ACA’s regime to allow the sale of plans that are medically-underwritten, offer more limited health benefits, or both.
The Administration’s latest such effort comes in the form of guidance by the Departments of Treasury and Health and Human Services that adopts a broader reading of the Act’s provision for state innovation waivers.
The agencies read the provision to permit states to seek waivers that would promote plans that lack the Act’s consumer protections. See State Relief and Empowerment Waivers, 83 Fed. Reg. 53,575 (Oct. 24, 2018).
HHS has recently supplemented that guidance with a discussion paper that describes a series of “concepts” for waivers that states could seek, including waivers under which a state could authorize – and potentially subsidize – the sale of medically-underwritten plans. Centers for Medicare & Medicaid Services, Section 1332 State Relief and Empowerment Waiver Concepts: Discussion Paper (Nov. 29, 2018).
The statute on which the agencies rely – section 1332 of the Affordable Care Act, 42 U.S.C. § 18052 – permits states to apply for waivers of some, but not all, of the ACA’s core coverage provisions. (Notably, the Act’s pre-existing condition protections are not waivable). Section 1332 imposes strict guardrails on this waiver process, requiring a state to show that its alternative plan would not raise the federal deficit, and would provide coverage that is as affordable and comprehensive as the coverage provided under the ACA, to at least as many of its residents as would be reached under the Act. Medically-underwritten plans do not offer affordable, comprehensive coverage to all comers, so it is difficult to imagine how a waiver that promotes the sale of these plans could meet the statutory guardrails. But the Trump Administration now reads Section 1332 to permit a waiver so long as a state would simply make comprehensive, affordable coverage available to its residents, even if many state residents would be steered instead to plans that offer more limited coverage. The Administration’s reading cannot be squared with the text of either section 1332 or the ACA as a whole. If the agencies proceed to approve a state’s application for a waiver in reliance on the interpretation of Section 1332 described in their guidance and discussion paper, the approval would almost certainly be set aside by a reviewing court.
This post is part of the Seventh Annual Health Law Year in P/Review Symposium, a digital conversation reflecting on 2018’s biggest topics in health law policy and discussing the upcoming issues of 2019.