State Waivers Emerge as Thorny Issue in Health Bill Talks

Senate Republicans still want states to have flexibility, but the latest CBO score highlights the risks of allowing state changes to insurance regulations.

Senate Majority Leader Mitch McConnell, flanked by Sen. John Barrasso and Majority Whip John Cornyn
AP Photo/J. Scott Applewhite
May 25, 2017, 8 p.m.

The latest score of the Obama­care-re­peal bill didn’t tell Re­pub­lic­ans much they didn’t already know, but it did con­tain some po­ten­tially wor­ry­ing news about a key fea­ture that got it past the House: state waivers.

Sen­ate Re­pub­lic­ans are stick­ing to their goal to provide states more flex­ib­il­ity over their health care sys­tems as part of their le­gis­la­tion, des­pite be­ing warned that such changes could cause sick pa­tients to lose their cov­er­age. But—in the wake of the Con­gres­sion­al Budget Of­fice’s new re­port—the Sen­ate ap­pears more de­term­ined to draft its own bill.

The CBO’s re­vised es­tim­ates for the House-passed Amer­ic­an Health Care Act in­clude as­sess­ments for waivers that would al­low states to change the cur­rent mix of es­sen­tial health be­ne­fits and al­low pa­tients with preex­ist­ing con­di­tions to be charged more.

CBO es­tim­ated that states that sub­stan­tially change the health care reg­u­la­tions could in­tro­duce in­stabil­ity for sick pa­tients. “[P]eople who are less healthy (in­clud­ing those with preex­ist­ing or newly ac­quired med­ic­al con­di­tions) would ul­ti­mately be un­able to pur­chase com­pre­hens­ive non­group health in­sur­ance at premi­ums com­par­able to those un­der cur­rent law, if they could pur­chase it at all—des­pite the ad­di­tion­al fund­ing that would be avail­able un­der [the AHCA] to help re­duce premi­ums,” the CBO re­port says.

Sen­ate Fin­ance Com­mit­tee Chair­man Or­rin Hatch said the CBO score caused a lot of con­cern, but ad­ded that he thinks the waivers won’t be jet­tisoned. “I think—I can’t say—but I think the waivers prob­ably will be part of the fi­nal bill,” he said.

Sen. Bill Cas­sidy said CBO’s as­sess­ment of the state waivers showed that in­sur­ance can be made af­ford­able for people who are young­er, but it does po­ten­tially destabil­ize the in­di­vidu­al mar­ket for those with preex­ist­ing con­di­tions.

“So the ques­tion is can we ima­gin­at­ively come up with something that al­lows them to buy a less ex­pens­ive policy with lim­ited be­ne­fits but non­ethe­less they are still in the same pool … they are still part of this big­ger pool that helps those who are older and sick­er or young­er and sick­er still have that be­ne­fit of a large risk pool,” said Cas­sidy.

Thomas Miller, res­id­ent fel­low at the Amer­ic­an En­ter­prise In­sti­tute, said that Sen­ate Re­pub­lic­ans could be more ex­pli­cit about where money provided in the sta­bil­ity fund should go, such as for a high-risk pool or re­in­sur­ance pro­gram, rather than provide a laun­dry list of oth­er pos­sible pur­poses for the cash.

They could also be more dir­ect about how the waiver that would al­low med­ic­al un­der­writ­ing could and should work for people who have had lapses in cov­er­age, Miller said. For ex­ample, he sug­ges­ted the bill would al­low pa­tients to re­gain ac­cess to the reg­u­lar private in­di­vidu­al mar­ket after spend­ing a cer­tain peri­od of time in a high-risk pool.

Miller ac­know­ledged that dir­ectly telling states what to do in this sec­tion may be ideo­lo­gic­ally hard for some Re­pub­lic­ans to do, but he said they could im­prove mes­saging re­gard­ing what lim­ited state waivers and in­sur­ance sta­bil­iz­a­tion fund­ing meas­ures could achieve.

“If they don’t want to set the para­met­ers so ex­pli­citly … at least ex­plain it in a bet­ter man­ner so they don’t lose as much sup­port for it,” he said.

Sen. Ted Cruz also voiced con­cern about the waivers pos­sibly tak­ing ef­fect too slowly. “The CBO score sug­ges­ted that the com­prom­ise reached in the House on waivers could have a slow up­take, and one of the things that was dis­cussed is provid­ing re­lief more quickly so that fam­il­ies who are strug­gling can re­ceive re­lief not just in the long term but in the short term as well,” he said.

Ex­perts told Na­tion­al Journ­al that states aren’t likely to shy away from the waivers, and could be pres­sured to take them up as oth­er changes un­der the Amer­ic­an Health Care Act take hold.

“I think it’s clear to me there would be a num­ber of states choos­ing the waivers due to the pres­sure of elim­in­at­ing the in­di­vidu­al man­date” and re­du­cing the premi­um sup­port, said Dania Pa­lanker, as­sist­ant re­search pro­fess­or at the Cen­ter on Health In­sur­ance Re­forms at Geor­getown Uni­versity.

Where the Sen­ate comes down on the sub­ject will de­pend on what they hear from con­stitu­ents, said Molly Reyn­olds, a fel­low in gov­ernance stud­ies at the Brook­ings In­sti­tu­tion. “It seems to be in­ter­est­ing to watch what push­back, if any, they re­ceive from con­stitu­ents in their states over the re­cess,” she said.

What We're Following See More »
Mueller Reportedly Reports
1 hours ago
Trump Cancels North Korea Sanctions Just After They're Announced
3 hours ago
Shanahan Says Caliphate Has Been Eliminated
5 hours ago
Interior Reverses Stand on Connecticut Casinos
6 hours ago

"The Interior Department is reversing course on an initial decision to ban two Native American tribes from building a casino, an issue at the core of an ethics investigation into former Secretary Ryan Zinke. The Bureau of Indian Affairs is now granting the Mashantucket Pequot and Mohegan tribes the right to build an off-reservation casino in Connecticut, a complete flip from a previous decision by Zinke in September 2017 to deny the permits."

Trump Considering Stephen Moore for Fed
7 hours ago

Welcome to National Journal!

You are currently accessing National Journal from IP access. Please login to access this feature. If you have any questions, please contact your Dedicated Advisor.