Lately, some odd developments have arisen in the world of Affordable Care Act waivers.
First, Oklahoma officials sent a curtly worded letter withdrawing the state’s Section 1332 waiver, saying it had no choice since the Trump administration failed approve its application in a timely manner. It's a move one expert told us could have significant implications for other states.
Then, on Friday, a report emerged that President Donald Trump himself read about Iowa’s request for a 1332 waiver in the news and responded by contacting the Department of Health and Human Services to ask the agency to deny the request.
Taken together, both moves are puzzling considering that under the Trump administration, HHS has explicitly encouraged states to apply for waivers that use high-risk pools or state-operated reinsurance programs to stabilize their individual markets. Since then, Republicans have arguably embraced state flexibility even more, as the concept played a starring role in both the Graham-Cassidy bill and the Senate’s ACA stabilization talks.
HHS said it did not have any comment about what happened with either state’s waiver request, so one can only speculate about the administration’s thinking in either case. It’s also worth noting that Iowa’s waiver application hasn’t yet officially been denied.
HHS risks losing states' trust
The fate of Oklahoma’s waiver, in particular, is likely to reverberate beyond just that state, according to Joel Ario, the managing director of Manatt Health.
The state’s waiver would have established a state-based reinsurance program to help stabilize its individual market and lower premiums. Oklahoma officials were told by HHS that if they could meet certain requirements within an expedited timeline, they could get their waiver approved in time for the 2018 plan year, Ario noted.
That faster timeline was possible because the state’s waiver request was similar to those approved in other states like Minnesota, he explained. However, the federal government didn’t hold up its end of the bargain and approve Oklahoma’s waiver when it said it would.
Ario, who previous served as Pennsylvania’s insurance commissioner and as director of the Office of Insurance Exchanges at HHS, said his experience in both roles have taught him that the bonds of trust between states and federal regulators are critical.
“And if you promise people something and don’t deliver, that’s going to have consequences,” he said.
Most likely, those consequences will be states rethinking whether they want to apply for their own waivers for 2019.
“I do think the agency is going to have to do something here to restore trust,” Ario said. And as for states, he predicts they’ll now want more “ironclad” assurances from HHS on whether they will get their waivers approved if they meet all the requirements by an agreed-upon timeline.
Iowa's waiver a unique case
Iowa’s proposed waiver, on the other hand, was unique and arguably merited more scrutiny than Oklahoma’s, Ario noted. In fact, Iowa’s proposal contained many conservative principles, which Washington and Lee University professor Tim Jost previously wrote would amount to “rewriting the ACA.”
“They really came in at the last minute and proposed something quite ambitious,” Ario added.
If the Trump administration actually approved Iowa’s waiver, it would probably be met with legal challenges, he noted. And expediting a unique waiver like Iowa’s—without approving a “lookalike” one like Oklahoma’s—might have undermined states’ confidence in the process even more.
Oregon waiver could test future HHS path
As for Oklahoma’s waiver, a major indicator of whether its case was a one-time fluke or the start of a trend could come as soon as this week. The comment period for another reinsurance-focused waiver, proposed by Oregon, ends Wednesday—after which the state expects it to be approved.
If that waiver is approved, it might suggest that there was something about Oklahoma’s waiver that led the federal government to renege on the agreement it had with the state, Ario noted.
But if Oregon’s waiver isn’t approved by HHS, he said, “then it does suggest that they’re backtracking on what they promised.”