HHS encourages the use of state innovation waivers for high-risk pools, reinsurance programs

The Department of Health and Human Services wants governors to embrace the use of state innovation waivers.

As Congress prepares to repeal and replace the Affordable Care Act, the Trump administration is also pushing governors to take advantage of one aspect of the law: state innovation waivers.

In particular, the Department of Health and Human Services wants to see waiver proposals that include high-risk pools or state-operated reinsurance programs, HHS Secretary Tom Price wrote in a letter to state leaders Monday.

As an example, the letter pointed to Alaska, which significantly mitigated a projected 42% increase in individual market premiums for 2017 by implementing a state-operated reinsurance program. The state now has applied for a Section 1332 waiver to implement the Alaska Reinsurance Program for 2018 and beyond.  

“States need the flexibility to develop innovative healthcare models that will improve patient access to care, increase affordability and choices offered, lower premiums and improve market stability,” Price said in an announcement. “Today’s letter highlights State Innovation Waivers as opportunities for states to modify existing laws or create something entirely new to meet the unique needs of their communities.”

Seema Verma, Trump’s nominee to lead the Centers for Medicare & Medicaid Services, is best known for helping Indiana design its unique version of Medicaid expansion through a state innovation waiver—which Price has called a “best practice for other states to follow.”

The Obama administration has also been supportive of giving states flexibility, but only to a point. For example, last November CMS denied New Hampshire’s waiver request that would have implemented a work requirement for Medicaid beneficiaries and imposed stricter identification requirements on them.

In addition, HHS and the Department of the Treasury released a guidance document that said they will evaluate waiver proposals not only based on how they affect the federal deficit and whether they provide coverage that’s as comprehensive and affordable as the ACA, but also how they would affect "vulnerable residents," including low-income, elderly and seriously ill individuals.