States trying to avoid innovation waivers to tweak ACA exchanges, experts say

Affordable Care Act highlighted
ACA innovation waivers haven't offered a perfect solution for states looking to try out new approaches to coverage. (Getty/Ellenmck)

States looking to bolster their insurance marketplaces have begun looking for ways to get around the burdens of ACA waivers.

Specifically, they are making changes to make coverage more appealing and expand their market populations outside of the Affordable Care Act’s section 1332, said Christen Linke Young, a fellow at the Brookings Institution and former Obama administration official, while speaking at America’s Health Insurance Plans’ National Conference on the Individual and Small Group Markets on Thursday afternoon.

The challenge in making section 1332 waivers a cornerstone of reforming the exchanges? Any application must be a federal deficit neutral, which is complex for states to address, she said.

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And because they have options outside of the waiver process, states haven’t gone all-in on applying, said Young. “I think the reason that you haven’t seen states jumping on 1332 has less to do with not wanting to go first, but that they’re heading in directions that don’t require a waiver,” she said.

RELATED: Azar—Short-term plans ‘absolutely not’ an attempt to destabilize the individual market

Young said section 1332 was built into the ACA with the goal of providing a clear set of values that states should work in when looking to offer new approaches to coverage. Under the Obama administration, states were required to ensure coverage at least remained steady and that plans complied with key ACA provisions like the essential health benefits. 

The Trump administration has pivoted in its approach to the innovation waivers and late last year issued new guidance that unravels the Obama-era approach.

Now considering them “state relief and empowerment waivers,” the Centers for Medicare & Medicaid Services said it will allow association health plans and short-term plans as comprehensive coverage options, though such plans often include skimpier benefits than the ACA requires. 

Edmund Haislmaier, a senior research fellow at The Heritage Foundation, said that the administration’s steps to redefine the innovation waivers expands the options at a state’s disposal to adjust their ACA exchanges.

RELATED: New ACA innovation waiver policy brings major changes to state marketplace coverage, KFF says

Section 1332 as the Obama White House defined it in 2015 amounted to “damage control” as the exchanges stumbled out of the gate, and offered a very limited set of options to address the challenges.

“It’s not the toolbox that we’d love to have, but we’re stuck with it,” Haislmaier said.

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