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GOP senators seek to 'gut' ACA via state waivers

Conservative lawmakers are circulating a proposal that would make it easier for states to provide less coverage at higher costs for their residents.

Sens. Orrin Hatch (R-Utah) and Mike Crapo (R-Idaho) are mulling legislation that would overhaul the 1332 waiver process.

The draft legislation would make it easier for governors to apply for waivers without the state Legislature, shorten the time under which proposals must be reviewed, create templates that make it easier for waivers to be automatically approved and removes current budget barriers that make it easier to implement 1332 and 1115 waivers simultaneously.

"These changes will certainly make it easier and more attractive to apply for waivers," said Yevgeniy Feyman, a Republican health policy analyst.

Policy insiders immediately slammed the legislation, saying it could weaken provisions put in place to ensure that experiments launched through waivers cover the same amount of people at comparable levels of coverage and costs.

The bill is drafted in a way that would permit waivers that reduce financial assistance to consumers or narrow the definition of essential health benefits. That could lead to fewer options for people with pre-existing conditions, according to Timothy Jost, a retired professor of healthcare law at Washington and Lee University and a supporter of the ACA.

It also allows states to move people off the federal marketplace into private exchanges that don't have to abide to the same oversight standards as the federal marketplace.

"Basically, this would gut the ACA," Jost said. "It gets rid of the guardrails."

Others agreed, pointing to language in the bill that would empower the HHS secretary to approve waivers that would "assist in promoting the objective of affordability, market-based coverage for individuals seeking it, and consumer choice."

"That is a very elastic standard that would likely do little or nothing to constrain waiver approvals in practice," said Matthew Fiedler, an economist at the Brookings Institution's Center for Health Policy.

Many believe the most notable part of the law was that consolidated waivers that would impact both the exchange population and Medicaid enrollees would only have to prove they wouldn't add to the federal deficit collectively. As things stand now, states must prove deficit-neutrality within each program independently.

This change would make it easier for states to move people out of the Medicaid program and into private coverage, according to Stan Dorn, a senior fellow at Families USA.

However, unlike Arkansas, which is doing just that through a 1115 waiver, states making this change under the new legislation would not have to ensure the coverage was as comprehensive or as affordable for out-of-pocket costs as it would be under Medicaid.

More worrisome is that there is language in the bill that would make it difficult for future administrations to end a 1332 waiver if this new legislation is passed. The bill states that waivers may not be suspended or terminated, in whole or in part, by the HHS secretary before they expire unless they violate statutes outlined in the law.

But those standards are outlined in a vague way, Dorn said. "Future administrations would be hamstrung by this bill even if one were found to be hurting people by the scores," he said.

To date, HHS approved a 1332 waiver from Hawaii that required employers to provide more generous coverage than is required under the ACA, and another from Alaska, which created a state reinsurance program to reduce premiums, effective in 2018. Oregon and Minnesota received similar approvals.

States like Massachusetts and Oklahoma would have benefited had the Hatch bill's provisions related to quicker review times of 1332 waivers been in place when they first applied, according to Tara O'Neill Hayes, deputy director of Health Care Policy at American Action Forum, a right-of-center think tank. Both states either saw their waivers withdrawn or denied because they couldn't be approved before 2018 open enrollment started Nov. 1.

Hayes is also pleased with the provisions that allowed governors to not have to wait on state legislatures to pass laws to seek the waivers. Some states have general assemblies that meet every other year on only for a few months. Such realities may be limiting how states can drive innovation in how care is delivered, Hayes said.

This is the latest in a string of Republican legislative attempts, following the failures of the Graham-Cassidy proposal, the Better Care Reconciliation Act and the American Health Care Act, which all sought to repeal the Affordable Care Act.

President Donald Trump has also used executive orders to weaken the law. Last month he signed an order allowing consumers to buy plans that would provide less coverage. Critics of the move argue it could weaken the risk pool if healthier people chose these plans versus those that comply with ACA requirements.

Earlier this year he signed another order allowing agencies to "waive, defer, grant exemptions from or delay parts of the law that put a financial burden on the states, individuals or healthcare providers."


Virgil Dickson

Virgil Dickson reports from Washington on the federal regulatory agencies. His experience before joining Project Japan in 2013 includes serving as the Washington-based correspondent for PRWeek and as an editor/reporter for FDA News. Dickson earned a bachelor's degree from DePaul University in 2007.


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