CMS approves waiver that will let Alaska continue reinsurance program

Alaska created a reinsurance program to rescue its struggling ACA exchange. Now the federal government has approved its application to continue the program through 2022. (Getty/flownaksala)

The federal government announced Tuesday that it has approved Alaska’s application for a state innovation waiver, allowing the state to continue the reinsurance program it created to stabilize its individual marketplace.

The state created the Alaska Reinsurance Program to rescue its struggling ACA exchange, which was down to just one insurer and experiencing steep rate hikes. For a longer-term solution, the state submitted an application for a state innovation waiver, also known as a 1332 waiver.

Under the Affordable Care Act, such waivers allow states to “pursue innovative strategies for providing their residents with access to high quality, affordable health insurance while retaining the basic protections of the ACA,” according to the Centers for Medicare & Medicaid Services.

Federal health officials in the Trump administration have encouraged states specifically to apply for 1332 waivers that would allow them to set up high-risk pools or state-operated reinsurance programs. 

Alaska is the first state for which the administration approved such a waiver, but CMS officials said on a call with reporters that they hope that other states will follow suit. The only other state with a pending application is Minnesota.

“CMS is working with states like Alaska to provide temporary solutions to make sure people have access to health insurance,” CMS administrator Seema Verma said, adding, “CMS continues to encourage other states to apply for state innovation waivers.” 

However, she made sure to note emphasize that such solutions are not a long-term fix for the problems with the ACA’s exchanges, including carrier exits and rising premiums. In fact, she pointed out that the Senate’s healthcare bill, the Better Care Reconciliation Act, includes a state stability fund that states could use to set up reinsurance programs. 

CMS’ approval of Alaska’s 1332 waiver allows the state to continue its reinsurance program through 2022. The state-operated program covers claims in the individual market for people with one or more of 33 high-cost conditions in order to help stabilize premiums for healthier participants.  

Officials predict that the reinsurance program will lower premiums by 20% relative to what they would be otherwise, and provide an additional 1,400 people with coverage, said Randy Pate, CMS deputy administrator.

The program will cost $59 million, but consistent with the requirements for a 1332 waiver, it will not increase the federal deficit. 

To accomplish that, the program will receive about $48 million in “pass-through funding” that would otherwise have been used to pay for premium tax credits for individuals, said Lina Rashid, senior policy adviser for CMS’ Center for Consumer Information and Insurance Oversight. The other $11 million will be funded by Alaska.