Katie Keith
October 13, 2021 - Health Affairs
With all eyes have been on Congress in recent weeks, federal and state officials have made several new announcements or requests related to the Affordable Care Act (ACA). This post summarizes those recent developments, including three states transitioning to state-based marketplaces for 2022 and new Section 1332 waiver developments. The latter topic area includes new comment periods on waiver extension requests, evaluation reports for three states, and Colorado’s request for a waiver amendment.
On October 4, 2021, the Centers for Medicare and Medicaid Services (CMS) announced that Kentucky, Maine, and New Mexico were approved to transition from HealthCare.gov to their own state-based marketplaces beginning with the 2022 plan year. The more than 173,000 enrollees who are currently enrolled through HealthCare.gov in these states will be able to renew their 2022 coverage through kynect in Kentucky, CoverME in Maine, and beWellnm in New Mexico. Consistent with HealthCare.gov, the open enrollment period for these marketplaces will begin on November 1, 2021.
All three states most immediately had a state-based marketplace on the federal platform where the state ran the marketplace but used the HealthCare.gov platform (instead of state technology) for eligibility and enrollment. That said, some of these states’ paths to a state-based marketplace were longer than others. Kentucky had a state-based marketplace that was considered highly successful until it was shuttered under Gov. Matt Bevin (R) beginning with the 2017 plan year; Kentucky residents had been using the federal marketplace until current Gov. Andy Beshear (D) recommitted to a Kentucky-specific marketplace. New Mexico was late in establishing its marketplace and relied on the federal platform to ensure an on-time launch in 2013. And Maine’s interest in transitioning from HealthCare.gov coincided with the tenure of current Gov. Janet Mills who was elected in 2018. (Louise Norris has even more information on the history of marketplace establishment in Kentucky, Maine, and New Mexico.)
Kentucky, Maine, and New Mexico follow in the footsteps of Nevada, which transitioned for 2020, and New Jersey and Pennsylvania, which both transitioned for 2021. Ahead of the 2022 plan year, there are thus 18 state-based marketplaces and 3 state-based marketplaces on the federal platform, while 30 states will continue to use the federal marketplace.
Other states may transition in the future. Virginia has operated as a state-based marketplace on the federal platform since the 2021 plan year and state officials are working to establish a full state-based marketplace for the 2023 plan year.
When we most recently revisited Section 1332 waivers, most states had been notified about additional federal pass-through funding they will receive for 2021; Georgia had rebuffed a request for updated data from CMS; and states had requested waiver extensions or amendments. CMS had also finalized a new marketplace rule that revised Trump-era interpretations of Section 1332 and established a more formal process for states to request extensions of or amendments to approved waivers. The following summarizes even more recent developments.
Colorado was the first state to be approved for a five-year extension of its current Section 1332 waiver for a state-based reinsurance program, while Alaska, Hawaii, Maine, Oregon, and Wisconsin each submitted letters signaling their intent to apply for five-year waiver extensions or amendments. Except for Maine (whose request is discussed here), these states asked for a simple extension and would make no changes relative to their existing programs.
Hawaii’s request—for a 5-year extension of its current waiver—was submitted in late April 2021. Hawaii is the only state whose waiver does not include a state-based reinsurance program. Instead, Hawaii waived the ACA’s small business health options program (SHOP) and related requirements through December 31, 2021. The state’s waiver extension request would continue to waive the same requirements—such as the establishment of a SHOP, employee choice, the definition of qualified employer, and certain qualified health plan requirements—through 2026. The extension request was deemed complete on September 14, which marked the beginning of a 30-day federal comment period that ends on October 14. Federal officials will issue a decision within 90 days of September 14.
In July 2021, Colorado submitted a letter of intent to apply for a waiver amendment to incorporate its new standardized public option plans. As discussed here, insurers in the individual and small group markets must, beginning with the 2023 plan year, offer a Colorado Option plan at premiums that are up to 15 percent lower than current premiums. Colorado wants to amend its current waiver to receive additional federal pass-through funding that reflects these new premium savings. The state intends to use the additional federal pass-through funding to help make coverage more affordable for individuals who do not currently qualify for marketplace subsidies.
CMS responded on October 4 to confirm that the application will be reviewed as an amendment request and to encourage Colorado to submit its waiver amendment application by November 30. The response also outlined the information that Colorado must submit as part of its amendment application. In general, it seems that the state must submit much of the same information as would be required if it were filing a brand-new application. The application must include a detailed description of the amendment request, demonstrate compliance with state public notice requirements, identify the state’s legal authority for the waiver, provide updated actuarial and economic analysis regarding Section 1332’s guardrails, and explain the expected impact on federal pass-through funding.
On October 5, CMS issued evaluation reports of Section 1332 waivers in Alaska, Minnesota, and Oregon. These were the first states with approved Section 1332 waivers for state-based reinsurance programs that began in 2018. The analyses were conducted by researchers at RAND Health Care on behalf of CMS and the Office of the Assistant Secretary for Planning and Evaluation; this is the “first set” of federal evaluations of Section 1332 waivers. Each evaluation report addressed the waiver’s impact on 1) enrollee premiums for certain bronze, silver, and gold plans; and 2) individual market enrollment by income and subsidy status (i.e., income). Reinsurance wonks will want to review the reports closely.
Overall, the programs in Alaska and Minnesota led to double-digit premium reductions for the relevant bronze, silver, and gold plans (relative to what premiums would have been in the absence of the waiver). The largest premium savings were realized by unsubsidized enrollees which led to higher enrollment of about 2,800 people in Alaska and about 66,000 people in Minnesota. In Minnesota, the waiver may have increased premiums for subsidized enrollees in the lowest-cost bronze plan, but RAND Health Care found no impact on enrollment across the three income categories that were studied. Overall, the researchers conclude, the Section 1332 waivers helped stabilize each state’s individual health insurance market.
The Oregon analysis was less conclusive. The waiver may have helped slow premium growth but did not necessarily reduce premiums or increase enrollment (relative to what would have occurred in the absence of the waiver). There was a decrease in coverage for an estimated 3,000 people with incomes from 351 to 400 percent of the federal poverty level—but no other significant enrollment effects for other subsidized populations. Qualitative interviews could help fill in some gaps in the data to better assess the impact of Oregon’s waiver.