Rules restrict health law waivers
Experts call state exemptions powerful but difficult to get
Obtaining waivers from parts of the 2010 Patient Protection and Affordable Care Act would allow Arkansas and other states to improve on the federal law and make broad changes to state health care systems, a former top federal Medicaid official said in Little Rock on Saturday.
But Dennis Smith, who was chief of Medicaid operations at the Centers for Medicare and Medicaid Services under President George W. Bush, said federal officials have signaled that they are unlikely to approve any such waivers this year.
“The guidance that got put out — states were pretty disappointed,” Smith said. “I think the real message was, ‘We’ve got too much on our plates right now.’”
Smith, now a principal in the Washington, D.C., office of the Dentons law firm, was among the participants in a panel discussion at the National Conference of Insurance Legislators’ spring meeting at the Little Rock Marriott on the future of health insurance exchanges.
The panel also included Cheryl Gardner, the director of the Arkansas Health Insurance Marketplace, which runs Arkansas’ health insurance exchange for small businesses; Gary Cohen, the former federal official in charge of health insurance exchanges; and Neil Sullivan, a former assistant commissioner at the New Jersey Department of Banking and Insurance.
Smith responded to a question from an Oklahoma official about the prospects for states to obtain a waiver under Section 1332 of the Affordable Care Act.
The law allows the U.S. Health and Human Services secretary to grant states
such waivers from many of the health care law’s requirements, as long as the changes would not reduce the number of people covered, offer less comprehensive coverage or increase the federal deficit.
Such a waiver can take effect no earlier than Jan. 1 of next year.
State Sen. David Sanders, R-Little Rock and a sponsor of the law creating Arkansas’ private option Medicaid program, said he wants Arkansas to obtain such a waiver, along with a waiver of Medicaid rules, allowing the state to subsidize coverage for low-income adults and children outside the Medicaid program.
Gov. Asa Hutchinson has said a Section 1332 waiver isn’t required for his proposal to make changes to the private option and rename it Arkansas Works. Instead the state would seek amendments to the Medicaid waiver authorizing the private option.
Under the private option, the state uses Medicaid funds to buy coverage for low-income Arkansans on the state’s federally run health insurance exchange for individual consumers.
The state created the program as a primary way of extending coverage to adults with incomes of up to 138 percent of the poverty level: $16,243 for an individual or $33,465 for a family of four.
The changes Hutchinson has proposed include charging premiums of about $19 a month to adults with incomes of at least the poverty level, referring unemployed, able-bodied enrollees to job-training programs, and using Medicaid funds to subsidize job-based coverage for those who are employed.
Hutchinson said Friday that using the state’s small-business health exchange as a way of using Medicaid funds to subsidize employer-sponsored coverage is “an option down the road,” but isn’t a necessary component of Arkansas Works.
A Dec. 15 report by the Boston-based Public Consulting Group said that offering the employer subsidies would require a waiver from Medicaid rules but not a Section 1332 waiver.
A Section 1332 waiver could allow the state to use federal funds to provide the job-based subsidies to a broader group of people, such as those with low and moderate incomes who are not eligible for Medicaid, according to the report.
Smith said many small employers are willing to contribute to their employees’ health insurance but can’t afford to pay enough to make the coverage affordable.
“The idea that you could use a 1332 waiver to combine those funding streams, I think would be tremendous,” Smith said.
But Smith said written guidance issued in December by the Health and Human Services and Treasury departments indicates that states would have difficulty winning approval for broad changes.
In particular, he said, the departments said they would not allow savings resulting from changes to a state’s Medicaid program to be considered in determining a proposal’s effect on the deficit.
“I think that’s where states said, ‘We’re going to wait,’” Smith said.
Cohen, now an executive with the Oakland, Calif.-based Kaiser Permanente, agreed that the guidance was “not particularly encouraging” to states.
But he added that federal officials might be more likely to grant waiver requests as part of an initiative that included expanding Medicaid, as Arkansas and 31 other states have done.
Sullivan, now an attorney in Morristown, Va., and Gardner said states shouldn’t give up.
“The first answer is not always the last answer, particularly in a highly sensitive, highly politicized issue like this,” Sullivan said.
Gardner said that providing subsidies through the small-business exchange for Arkansans who don’t qualify for Medicaid could be a “Phase Two” of changes to the state’s health care system.
She expects other states to submit waiver requests to implement other changes.
“We will begin to see ideas percolate up, things you never imagined,” Gardner said.