In the past week, Georgia’s governor, Brian Kemp, announced his plan to request exceptions for his state that would circumvent key consumer protections on individual insurance, and that would create a Medicaid expansion plan that falls far short of the coverage authorized by the Affordable Care Act. Both of these plans are legally questionable, and, if approved, they would weaken insurance coverage protections, effectively turn funding for premium tax credits into a block grant, and leave hundreds of thousands of Georgians without coverage while encouraging other states to downsize their Medicaid program.
Last year, the U.S. Department of Health and Human Services rescinded and rewrote Obama-era guidance outlining requirements for so-called “1332 waivers,” a provision in the Affordable Care Act intended to give states the flexibility to remake their state’s health insurance system, including changes to essential health benefits, premium tax credits, and cost-sharing requirements—so long as the new system met certain standards. The statute states that the modified coverage must be as comprehensive and affordable as the standard ACA system, cover as many residents, and that it cannot change certain protections, such as those prohibiting discrimination based on a pre-existing condition.
The Obama administration had clarified through guidance that all 1332 waivers must retain comprehensive and affordable coverage for residents, including specifically retaining comparable levels of affordability and comprehensiveness for low-income and vulnerable populations—not just in the aggregate for the population as a whole.
Since the transition to the Trump administration, the guidance has been rewritten. The new policy—which Senate Democrats recently tried to invalidate, but the effort failed along party lines—weakens the protections for low-income residents, and no longer requires that a comparable number of residents actually enroll in similarly affordable and comprehensive coverage, only that they have access to such coverage. Finally, the guidance encourages states to move toward options like association health plans and short-term limited duration plans, which have separately been given life across the country through other legally questionable Trump administration deregulation efforts.
In addition, the Trump administration has also encouraged states to submit (and has approved) Medicaid waiver requests that would allow the inclusion of work requirements, and has also approved waivers that, for the first time, include certain lock-outs, fees, and certain premium requirements. Over the summer, however, the administration did reject Utah’s proposal to only expand Medicaid for individuals earning up to 100 percent of the federal poverty line while also trying to benefit from the ACA’s higher federal match rate.
The 1332 Waiver Plan
Governor Kemp’s plan is one of the most aggressive plans to make use of the administration’s new guidance. His request would end the sale of health care plans on healthcare.gov and force residents to purchase insurance on private websites. It would give the state of Georgia control of the $2.7 billion in taxpayer money allocated to Georgians for federal tax credits to purchase both existing qualified health plans (QHPs) that include the ACA benefit structure, but also non-QHPs, including short-term health plans and association health plans (now available through previous Trump deregulatory efforts), the latter of which frequently offer skimpy benefits and have a history of fraud. The state could also redistribute dollars differently in the future than current federal subsidy structures require, though the waiver application states that they would go back for approval before doing so. And if the state ran out of money, it could create a waiting list for access to federal subsidies.
These waiver requests should trigger significant questions and concern at the Center for Medicare and Medicaid Services (CMS), and, if approved, would be legally dubious and will likely spur challenges in court. In particular, the requests raise legal questions around the restructuring of federal subsidies as a block grant. The waiver states that if the cost exceeds the state portion of the program, it will create a waiting list for those otherwise income-eligible for subsidies. It also raises questions about whether it would be in compliance with 1332 statutory requirements in allowing for federal subsidies to go to plans that could offer few essential health benefits, and in particular whether the adverse selection created by such a structure would effectively both limit access to comprehensive coverage in certain markets and increase the cost of the benchmark plan, and thus increase subsidy costs for the state—creating a feedback loop that would then expand the waiting list for coverage.
On the positive side, Governor Kemp is also proposing to use the 1332 waiver’s authority to request that the state institute “reinsurance,” providing a guarantee that the state would reimburse issuers for the highest cost claims, which would spur insurers to then drop premiums in the market—a strategy successfully undertaken by many other states through 1332 waviers. Unfortunately, some of those savings would go to subsidizing skimpy plans not envisioned by the underlying statute.
The Medicaid Waiver Plan
The state of Georgia has refused to expand Medicaid for the past five years, leaving as many as 481,000 otherwise eligible residents without access to coverage. The governor’s Medicaid waiver proposal would leave 9 out of 10 of those people uncovered, reaching only 50,000 people. This is primarily because the proposal asks for waiver authority to cover only those under 100 percent of the federal poverty level, and includes legally dubious work requirements for participants. The waiver proposal also requests the flexibility to subsidize employer coverage if an offer is available and cheaper for the state, regardless of how comprehensive or skimpy that coverage may be in comparison to Medicaid options. The governor had initially considered a similar approach to Utah after the state legislature passed the authorization to pursue a waiver (so long as the governor did not pursue a full Medicaid expansion). Presumably in response to Utah’s experience, Kemp’s proposal does not assume the state will receive an ACA-level match from the federal government.
Litigation in several states has halted the implementation of work requirements across the country, and several other states have suspended their work requirements pending the outcome of that litigation. In fact, the information available on Georgia’s planned work requirements looks similar to many of the requirements implemented in Arkansas, wherein 18,000 people, or 1 in 4 enrollees subject to the requirements, had already lost coverage by the time the courts put a stop to the provision.
Combined, analysts calculate that the waiver proposals would cost more but cover fewer Georgians than a full Medicaid expansion. As they stand, the proposals put forward by Governor Kemp represent a new strategy by a state to gut ACA protections and remake the Medicaid program. If approved, the plans would surpass statutory authority, leaving a continued lack of coverage options for residents who should otherwise be eligible for Medicaid, and constitute a return to the pre-ACA days of fewer protections for consumers purchasing private coverage.