As a new Medicare-for-all bill was introduced in the House recently, a number of state-level legislative projects are generating parallel excitement about Medicaid buy-in plans.
In his recent Bill of Health post, Rahul Nayak explained how Medicaid Buy-In would allow states to introduce a public option to their insurance marketplaces. Rahul points to some major questions about how buy-in plans might be implemented. Some of these questions relate to how these plans will operate within the federal statutory system that governs health care marketplaces and Medicaid. In a December Ohio State Law Journal article, for example, Professor Lindsay Wiley explored how Medicaid buy-in plans could be enacted within the waiver systems that shape state implementation of marketplaces and the availability of premium tax credits. Most recently, Emma Sandoe, in an interview for this blog, discussed the ways states are innovating in this space.
Specifically, states seeking to implement buy-in plans will navigate questions about how to leverage the Section 1332 waiver provision of the ACA. Section 1332 of the ACA allows states to apply for waivers of certain marketplace requirements. Through these waivers, states are empowered to provide insurance options that don’t meet all QHP standards and may receive premium tax credits to directly fund insurance products. How states choose to approach this waiver system will dictate what type of funds are available to subsidize coverage, the design of buy-in offerings, and the level of coverage buy-in plans will offer.
The Manatt Health report cited by Rahul outlines how two buy-in models might employ this waiver system. Under “Model 1,” states could offer Medicaid plans alongside the qualified health plans (QHP) in their marketplaces. The Mannat Health report suggests that states could proceed with Model 1 without applying for a 1332 waiver under the ACA if the offered plans met QHP standards. However, states seeking to (1) provide an insurance product that varies from QHP standards, (2) avoid contracting with an issuer will likely need to apply for a 1332 waiver, or (3) receive tax credits to fund their buy-in programs.
Under “Model 2,” buy-in plans would be offered separately from ACA risk pools. Benefits under Model 2 would be similar to Medicaid. The report indicates that this option “most certainly requires” a 1332 waiver from the federal government because the product would not be a QHP offered on the marketplace. Thus, a waiver would be required for states seeking to receive premium tax credits for buy-in offerings.
As the Mannat report notes, Section 1332 waivers introduce a significant element of risk into states’ calculus regarding buy-in. These waivers are discretionary, and states will put themselves in the hands of federal administrators in designing buy-in programs dependent on Section 1332. News outlets have been painting “buy-in” proposals as stop-gap measures that state legislators might put in place as they wait to see how Medicare-for-all proposals fare in Washington and among voters. However, big questions about federal administration of the ACA could very well keep Washington in the picture.
Alexandra Slessarev is a 2018-2019 Student Fellow with the Petrie-Flom Center.
