Section 1332 Waivers: An Opportunity to Increase Access to Health Services Through Affordability

June 27, 2019|11:04 a.m.| ASTHO Staff

The individual commercial health insurance marketplaces are significant sources of insurance coverage that make access to healthcare services possible for thousands of individuals in the United States. Section 1332 waivers allow states to test new approaches to these marketplaces by waiving certain federal rules, as outlined in Section 1332 of the Affordable Care Act (ACA). There has been a flurry of activity at the state and federal levels about these waivers in recent months. Amid this activity, state and territorial health agencies (S/THAs) have an opportunity to play an important role in ensuring continued access to healthcare services by contributing to the development of 1332 waivers.

The goal of Section 1332 waivers is to enable states to experiment with alternative payment and delivery models in federal marketplaces while ensuring roughly the same level of health insurance coverage remains available to a state as was made possible by the tax credits and cost-sharing reductions provided via the ACA.

The Centers for Medicare & Medicaid Services (CMS) published new guidance in October 2018 that changed several components of the 1332 waiver processes, including allowing executive orders or state regulations to substitute state legislation that had previously been a requirement for pursuing a 1332 waiver. The new guidance also expanded the use of short-term, limited-duration plans and association health plans, and indicated that CMS will analyze the aggregate effects of a waiver rather than the effects on a subgroup of state residents.

CMS has approved Section 1332 waivers in the following states: Alaska, Hawaii, Maine, Maryland, Minnesota, New Jersey, Oregon, and Wisconsin. These waivers have primarily focused on reinsurance programs. Reinsurance programs allow states to reimburse insurers for certain high-cost claims in order to lower premiums overall for participating enrollees. Reinsurance is therefore a mechanism to improve access to healthcare for those in the individual health insurance market by making it more affordable. In June 2019, CMS accepted waiver applications to create reinsurance programs from Colorado (following the May 17 enactment of HB 19-1168) and North Dakota (following the April 23 enactment of HB 1106).

To date, at least 35 states have considered legislation to initiate the 1332 waiver application process and 20 states have enacted related laws. The content of this state legislation ranges from authorizing the establishment of a reinsurance program to establishing a taskforce to develop recommendations on 1332 waivers. In the 2019 legislative session, Delaware, Montana, and New Mexico enacted legislation authorizing the development of a 1332 waiver application to establish a state reinsurance program. Oregon enacted legislation (HB 2010) to authorize the state to request an extension of the current 1332 waiver: the Oregon Reinsurance Program. Maryland enacted legislation (HB 1098) to authorize the state to submit a 1332 waiver by January 1, 2020, to allow the state to administer a state-based tax credit to small businesses to help fund monthly insurance premium payments.

Several other states considered but did not enact similar legislation, including Connecticut, Missouri, Nebraska, Minnesota, Virginia, and Wyoming. Missouri introduced additional legislation (SB 414) to create a health insurance innovation taskforce to draft recommendations on the development of a 1332 waiver and share recommendations with the governor by Dec 1. The proposed legislation in Connecticut, Missouri, Virginia, and Wyoming would have authorized the submission of a 1332 waiver application to establish reinsurance programs. Rhode Island also has pending legislation (HB 5916) that would allow for the creation of a reinsurance program. The state’s legislative session ends on June 30.

ASTHO will continue to monitor Section 1332 waiver activity and build capacity to engage healthcare payers and providers in ensuring access to care by maintaining and increasing access to affordable health insurance coverage.

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