On November 4, Georgia released two draft waiver applications for public comment—a Section 1332 State Relief and Empowerment Waiver (“1332 waiver”) to restructure the state’s individual insurance market and a Section 1115 waiver, “Georgia Pathways to Coverage,” that seeks to expand Medicaid to those Georgians who are working at least 80 hours a month and have incomes below 100% of the federal poverty level (FPL). The 1115 Demonstration application also requires Georgians with access to affordable (as defined by the state1) employer-sponsored insurance (ESI) to enroll in that coverage.
The draft 1332 waiver would substitute Healthcare.gov (the federally facilitated Marketplace) with a state-based eligibility and enrollment system and replace the Affordable Care Act (ACA) premium tax credits (PTCs) with state-designed subsidies that could be used to purchase non-ACA-compliant plans, as well as institute a state reinsurance program. Notably, under the waiver, federal and state funding for subsidies would be capped2 and subsidies would be awarded on a first-come-first-served basis. After the state-designated funding cap is reached, residents could continue to enroll in coverage but would be added to a waitlist to receive subsidies.
If approved, Georgia would be the 13th state to receive a reinsurance waiver. Other waiver provisions, however, would provide a first test for new flexibilities outlined in the Trump Administration’s 1332 waiver guidance released last year.
Some stakeholders have raised significant concerns about the 1332 waiver, including the loss of healthcare coverage as an entitlement, reduced access to coverage under a capped subsidy structure, and consumer awareness about the difference in benefits and consumer protections between qualified health plans (QHPs) and non-QHP coverage.
Taken together, the waivers are designed to use federal funding authorized under the ACA to shift some Georgians into coverage that does not meet ACA eligibility, benefit, or consumer protection standards. Both waivers, if approved, would likely be subject to litigation.
The state is holding a series of public hearings about both waivers throughout November, and the public comment period ends December 3. Georgia plans to submit the 1332 waiver for federal review before December 20, 2019, and the underlying state legislation requires that the 1115 waiver be submitted no later than June 30, 2020.
Section 1332 Innovation Waiver
Georgia’s 1332 waiver has two parts—a state reinsurance program and the “Georgia Access Model,” a state program that would replace Healthcare.gov and introduce state-designed subsidies.
Phase I: Reinsurance. The first phase of the waiver, proposed for plan year (PY) 2021, would implement a state reinsurance program for high-cost claims. The proposal includes a three-tier design with the goal of targeting premium reductions to high-cost regions, an idea first approved in Colorado’s 2019 reinsurance waiver. The waiver analysis estimates premiums will decrease 10% on average statewide. The program is expected to cost $368 million in 2021 and be financed via federal pass-through dollars and state funds.
Phase II: Georgia Access Model. In the second phase, proposed for PY 2022, the state would waive participation in Healthcare.gov, and instead transition “front-end” plan shopping and selection services to private brokers and carriers. The state would develop an eligibility and verification infrastructure and administer state subsidies in lieu of federal tax credits.
- Administration. Without Healthcare.gov,the state would be responsible for determining enrollee eligibility and application verification in communication with the Federal Data Services Hub.
- Plan Selection. Instead of using Healthcare.gov, plan selection and outreach functions would be decentralized and administered by private entities, including commercial web brokers, insurer websites, and other agents and brokers.
- Non-ACA Compliant Plans. Residents would be allowed to use state subsidies toward non-QHPs that meet some ACA requirements—such as guaranteed issue and prohibition of health underwriting—but these non-QHPs would not be required to cover all of the ten essential health benefits. Georgia estimates the non-QHPs would be priced at 90% of QHPs’ costs, which suggests significant benefit differences and is likely to attract younger, healthier enrollees to cheaper, less robust non-QHP products.
- State Subsidies. If the waiver is approved, the state will utilize a block grant calculated annually based on the federal PTC dollars residents would have received on Healthcare.gov, supplemented with state funds, to finance state-designed subsidies. In PY 2022, state subsidies will mirror the current PTC financial assistance structure, but the state expressly reserves the right to modify the structure in future years, which may result in reduced and/or reallocated subsidies based on available state funding.
Potential for Approval. Section 1332 establishes four guardrails3 that must be satisfied for a state’s waiver request to be approvable. The Georgia waiver’s ability to meet the statutory guardrails remains to be seen, particularly affordability, comprehensiveness, and deficit neutrality requirements. Georgia will be the first state to apply for a waiver under the current Administration’s relaxed guardrail interpretation.
Section 1115 Medicaid Expansion Waiver
In tandem with its 1332 waiver, Georgia unveiled its draft Medicaid Section 1115 waiver, “Georgia Pathways to Coverage,” which proposes Medicaid expansion to 100% of the FPL, with work/community engagement (CE) requirements as a condition of initial eligibility. In addition to other coverage-constraining features,4 the waiver proposes to require individuals who qualify for Pathways to Coverage and have access to ESI to enroll in that coverage, rather than Medicaid, and receive premium and cost-sharing assistance to purchase it—without providing wraparound benefits to supplement ESI coverage that is less generous than Medicaid.
Most notably, the waiver includes three key provisions that have not been approved by the Administration to date:
- “Partial” expansion with enhanced match—Despite CMS’s July 2019 announcement that it will not approve the ACA enhanced match for partial expansion,5 Georgia’s draft waiver includes a request to do just that. The state’s enacting legislation gave Governor Brian Kemp (R) authority to seek a Medicaid waiver up to “a maximum of 100 percent of the federal poverty level.” Assuming that CMS will deny the enhanced match for a partial expansion, it remains to be seen whether the Governor and the state legislature will consider alternative waiver terms, such as extending the eligibility threshold to 138% of the FPL or implementing a partial expansion without enhanced match.
- No “wrap-around” coverage for ESI-enrolled beneficiaries—The draft waiver also seeks to require individuals who have access to ESI to enroll in that coverage “when it is cost-effective to the state.” In these instances, Medicaid will subsidize the cost of premiums and associated cost-sharing for the ESI. The draft waiver varies from similar, previously approved programs because the state does not plan to offer wrap-around coverage to ensure ESI-enrolled individuals receive the same benefits as other Medicaid-enrolled individuals.
- Work/CE as a condition of initial eligibility. To date, CMS has not approved requiring work/CE as a condition of initial eligibility for and enrollment in Medicaid, although CMS is considering a similar demonstration proposal by the state of Idaho.
1 The draft waiver defines “cost effective” as at least a $1.00 difference between the capitation rate that would be paid to the Medicaid managed care organization if the individual is enrolled in Medicaid, compared with the cost of covering the individual’s cost-sharing and premium costs in ESI.
2 Georgia will limit total financial contribution to the waiver programs to $255 million for PY 2022 (adjusted annually thereafter) for both the reinsurance program and state subsidies.
3 Coverage under the waiver must (1) be at least as comprehensive as coverage under the ACA, defined as essential health benefits by the ACA; (2) be at least as affordable as coverage under the ACA; (3) be provided to a number of people at least comparable to the number that would be covered under the ACA; and (4) not increase the federal deficit.
4 The waiver also includes premiums (<2% of household income) as a condition of initial and ongoing eligibility for most individuals with incomes greater than 50% of the FPL; up to $30 co-payments for non-emergency use of the emergency department; waivers of retroactive eligibility, hospital presumptive eligibility, and prompt enrollment; and a waiver of non-emergency medical transportation.
5 For eligibility set lower than the ACA’s 138% of the FPL requirements.