CMS Provides the Proof – Sec. 1332 Waivers Have Lowered Health Insurance Premium Costs | Citizens Against Government Waste

CMS Provides the Proof – Sec. 1332 Waivers Have Lowered Health Insurance Premium Costs

The WasteWatcher

Every Biden administration official and member of Congress who think that everything the Trump administration did should be automatically reversed regardless of its merit needs to review the latest Centers for Medicare and Medicaid (CMS) report, “CCIIO Data Brief Series – State Innovation Waivers: State-Based Reinsurance Programs,” released on August 5.  It confirms one of the best initiatives the Trump administration undertook to reform the Patient Protection and Affordable Care Act (ACA), or Obamacare, was the use of Section 1332 State Innovation Waivers for state-based reinsurance programs.  Citizens Against Government Waste (CAGW) has been touting this reform, led by former CMS Administrator Seema Verma, since the use of the waivers were expanded in October 2018, which you can find here, here, and here in our WasteWatcher and Critical Waste Issues publications.

One of the few provisions of the ACA that provided an opportunity for innovation outside of the federal government’s control is Section 1332, which allows states to apply for waivers from certain requirements to “pursue innovative and individualized state strategies that provide their residents with access to affordable, quality health care.” There are rules to develop a waiver and CMS “must determine that the waiver will provide coverage that is at least as comprehensive as the coverage provided without the waiver; will provide coverage and cost sharing protections against excessive out-of-pocket spending that are at least as affordable as without the waiver; will provide coverage to at least a comparable number of residents as without the waiver; and will not increase the federal deficit.”

Fourteen states submitted a waiver request and were permitted to create and operate state-based reinsurance programs for their individual insurance markets:  Alaska, Colorado, Delaware, Maine, Maryland, Minnesota, Montana, New Hampshire, New Jersey, North Dakota, Oregon, Pennsylvania, Rhode Island, and Wisconsin.  States came up with different designs but all of them stabilized their individual insurance markets, lowered premiums, some by significant amounts, and increased enrollment while protecting those with pre-existing conditions.  The CMS report also discusses the different financing mechanisms the states used to fund their portion of the program.

For example, in 2018, the first year of its waiver, Alaska saw up to an average 20 percent reduction in insurance premiums.  By 2021, Alaska had experienced a 41.7 percent drop in premium costs with the waiver, compared to if it had no waiver.  Maryland saw similar results.  In its first year of the waiver, insurance premiums saw an average drop of 30.18 percent.  By 2021, it experienced a 34.0 percent drop with the waiver as compared to not having the waiver.  Pennsylvania, which implemented their waiver in 2021, saw a 4.9 percent drop in premiums.  Says, CMS, “From PYs 2018 to 2021, states that have implemented section 1332 state-based reinsurance waivers for the individual market have reduced statewide average second-lowest-cost silver plan premiums by a range of 3.75% to 41.17% relative to premiums absent the waiver.”

According to an Aug 5 Inside Health Policy, CMS is in the process of reviewing a request from Colorado to extend its program. CMS Administrator Chiquita Brooks-LaSure said, “The Biden-Harris Administration looks forward to deepening innovation with states as we work to give more Americans the peace of mind that comes with health coverage.  State partnerships are critical as we build on the Affordable Care Act and work to reduce health care costs and by improving health coverage.  We are encouraged to see that states have taken advantage of implementing section 1332 waivers and are lowering costs for consumers.”

Additional states should take advantage of these reinsurance waivers and Congress should codify the initiative in law.   But the consistent knee-jerk undoing of Trump administration initiatives that have been successful in accomplishing their goals means that someone in the Biden administration could overrule CMS Administrator Brooks-LaSure’s apparent support of retaining and expanding the waivers.  If they are revoked or stifled, whomever makes that decision will have a lot of explaining to do to the consumers and patients who have saved millions of dollars in healthcare costs and had their pre-existing conditions protected across the country.

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