By Abe Sutton
The Georgia Access Model
Section 1332 lets states alter select ACA requirements to find the approach that is right for their state and encourage insurance coverage innovation. Georgia has released two prior versions of this waiver proposal; the state’s most recent revision to its 1332 waiver application offers a new vision for the individual market and a potential roadmap for other states. The innovation, the Georgia Access Model, accompanies the now-traditional reinsurance component included in prior 1332 waivers.
The Georgia Access Model shifts Georgia off of healthcare.gov. It instead opts for a decentralized enrollment system that makes plans available through the commercial market. Georgia argues this will increase individual market enrollment and reduce premiums. In this piece, I address some criticisms of the model and present an argument for approving Georgia’s waiver.
What critics are saying
Incentives to innovate may be lacking
Critics allege that removing the exchange without any new incentives for private entities will not increase competition. However, they fail to consider how removing the public exchange that captures the bulk of the market may incentivize private players to compete. Knowing a large chunk of the market is no longer locked up in a government-run option, it is conceivable that commercial players will invest more heavily to match consumers with health plans.
In some ways, this would parallel how enrollment through the exchanges remained roughly stable even after the federal government curtailed spending on ACA Navigators. Given the shortfall in funding, private entities switched tactics to bridge the gap.
Only time can tell how large of an incentive removing the government-run option will be for private insurers. It is certainly plausible that on its own it will not provide sufficient incentive for new investment and fail to draw in new consumers. But a benefit of 1332 waivers is that they allow for state-level experimentation to discover effective approaches.
Enrollment in non-ACA-compliant plans may surge
Critics also express concern that consumer enrollment in non-ACA-compliant plans will increase with the shift to the commercial marketplace. However, if this occurs, it would result from Americans choosing the coverage they prefer. After all, the waiver simply opens more options while maintaining the availability of coverage that resembles existing offerings. This is mandated under the current 1332 guidance, which requires the state to still make available all the plans that would have been on the exchanges. It simply also allows the state to open up more affordable coverage options.
With this waiver, Georgia seems to be welcoming precisely the type of choice and affordability HHS encouraged with the current 1332 guidance. HHS explained that “a major disadvantage of the 2015 interpretation was that it deterred states from providing innovative coverage that, while potentially less comprehensive than coverage established under the PPACA, could have been better suited to consumer needs and potentially more affordable and attractive to a broad range of its residents.” The ACA struck a default balance on these issues, but carefully left space for continued experimentation. After all, the ACA was a result of a state-level experiment.
The future of 1332 Waivers
With the goal of encouraging state-level innovation to promote choice and competition in mind, Georgia’s experience could offer important lessons for the federal government, other states, and the private sector.
Currently, the 1332 guidance requires coverage losses to not exceed gains within each year of the waiver. The federal government should revise the current 1332 guidance to allow coverage losses to not exceed gains over the life of a waiver. Critics have highlighted that Georgia may have struggled to make the math work for the current, annual requirement. But this requirement discourages innovations that may take longer than a year to have an impact. The ACA itself took multiple years to stabilize.
Other states should consider submitting similar waivers if Georgia’s waiver is approved. They also should develop further-reaching waivers along the lines of the waiver concepts released by the federal government. States can be confident that if they develop waivers along the lines of one of the waiver concepts, they would have a good chance of approval in a second Trump term. After all, the federal government releasing waiver concepts seems indicative of a desire to approve similar waivers.
Finally, private sector players should spot an investment opportunity to help consumers enroll in the plan that is right for them. This is particularly true if this model spreads to other states. Startups like Stride and HealthSherpa should keep an eye on this waiver.