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Life Health > Health Insurance > Health Insurance

New Senate Health Bill Includes Waiver Wild Card

By Allison Bell

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Senate Republicans may have shielded part their new health coverage bill draft from impact analysis by putting a provision for changing Affordable Care Act product rules in a short waiver program provision. 

(Related: Senate Republicans Unveil Health Care Plan)

The drafters of the new Better Care Reconciliation Act of 2017 draft have put the waiver provision in Section 206.

PPACA Section 1332 Waivers

The Affordable Care Act is actually a statutory package. Part of it comes from the Health Care and Education Reconciliation Act of 2010, but most of it comes from the Patient Protection and Affordable Care Act of 2010.

PPACA Section 1332 already offers states a provision they can use to ask the U.S. Health and Human Services secretary for waivers from the usual Affordable Care Act rules.

Under the administration of former President Barack Obama, HHS secretaries required any state asking for a waiver to keep Affordable Care Act consumer protection rules, such as the ban on medical underwriting, in place.

HHS Secretary Tom Price has already announced that he will try to interpret the existing waiver provision flexibly.

Better Care Draft Section 206 Waiver Proposal

Better Care draft Section 206 would let a state go beyond the Obama administration waiver program limits.

A state could ask to waive the health insurance requirements described in PPACA Section 1332(a)(2), if the state came up with another way to increase access to comprehensive coverage, reduce average premiums and increase enrollment.

The Better Care draft does not actually list the requirements PPACA in Section 1332(a)(2) that a state could ask to waive.

Maze (Image: Thinkstock)

(Image: Thinkstock)

PPACA Section 1332(a)(2) itself refers to six major sections of the Affordable Care Act.

The sections listed in PPACA Section 1332(a)(2) include the rules for running the Affordable Care Act public exchange program; the rules for deciding which people qualify for exchange plan premium tax credit subsidies; the rules for policing the activities of public exchange program managers and exchange plan issuers; and the requirements for the “essential health benefits” package, or standard benefits package used in many Affordable Care Act programs and calculations.

It’s not clear from the Better Care draft what kinds of standards an HHS secretary could use to determine whether a state had developed a reasonable alternative to the Affordable Care Act requirements.

In theory, Price might be able to use the provision to approve state waiver applications that would eliminate hospitalization benefits from the list of essential health benefits, or add coverage for psychic healers. In the real world, other laws, regulations, application review rules, court ruling and traditions might limit the scope of the waiver applications that were actually approved.

The House American Health Care Act Section 136 Waiver Proposal

When House Republicans developed their American Health Care Act bill, which passed by a 217-213 vote May 4, they put a detailed waiver program provision in Section 136 of the text. Section 136 of the AHCA bill would create a “Permissible State Waiver to Encourage Fair Health Insurance Premiums.”

(Related: House Posts New AHCA Bill Packet, Prepares for Floor Vote)

A state could use the AHCA Section 136 waiver to change its essential health benefits package.

A state could also use AHCA Section 136 to let insurers increase the difference between the rates they charge the oldest adult enrollees and the youngest adult enrollees, or to let insurers consider applicants’ health status when setting rates for applicants who have failed to keep themselves insured. 

Congressional Business Office Bill ‘Scoring’

Republicans have 52 seats in the Senate.

Under traditional Senate budget rules, the Congressional Budget Office analysis of the impact of a bill may affect whether the bill needs 51 votes to get through the Senate or 60.

CBO analysts noted in their analysis of the House American Health Care Act bill that they have an especially hard time scoring the effects of flexible waiver provisions.

“In addition to the challenge of estimating the fraction of the population living in states for which the different waivers would be approved, predicting the overall effects of the myriad ways that states could implement those waivers is especially difficult,” the GAO analysts wrote.

Possible Effect on Agents and Brokers

For some agents and brokers who want to give clients clear answers about how health coverage might change under the Better Care draft system, the Section 206 waiver provision might be frustrating.

The states that have been enthusiastic supporters of the Affordable Care Act would probably try to keep the current rules in place, and the states that have shunned the law would probably try to loosen the current rules.

States that have taken a neutral or lukewarm approach to the law could take either path.

— Check out 5 Peeks at the Senate’s Small-Group Health Proposal on ThinkAdvisor.

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