The waiver is designed to temporarily stop the collapse of the Obamacare insurance exchange, says CMS Administrator Seema Verma.
Federal officials have granted Alaska's request for a waiver of the Patient Protection and Affordable Care Act (PPACA) to establish a state-administered reinsurance program in the individual-insurance market.
On Tuesday, the Centers for Medicare & Medicaid Services announced that the agency and the U.S. Treasury Department had finalized approval of Alaska's request for a State Innovation Waiver for Section 1332 of the PPACA. Alaska officials applied for the 1332 Waiver on Jan. 3.
According to a CMS Fact Sheet released Tuesday, Alaska's 1332 Waiver exempts the state from a key PPACA provision: "the requirement to consider all enrollees in a market to be part of a single risk pool, to the extent it would otherwise require excluding total expected State reinsurance payments."
In a statement Tuesday, CMS Administrator Seema Verma said the 1332 Waiver establishing the state-run Alaska Reinsurance Program (ARP) is designed to stop the collapse of the Obamacare insurance exchange in The Land of the Midnight Sun. "Approval will temporarily stabilize Alaska's individual-insurance market, which only has one carrier and has experienced a 203% increase in insurance premiums since the Affordable Care Act began."
Alaska's waiver request met four essential criteria for approval, the CMS Fact Sheet says:
- ARP is expected to ensure that healthcare coverage matches or exceeds coverage requirements under the PPACA
- ARP is expected to maintain or increase affordability of coverage obtained through the PPACA insurance exchange
- ARP offers "coverage to at least a comparable number of Alaska residents"
- ARP will not increase the federal deficit
State officials and the Alaska Comprehensive Health Insurance Association (ACHIA) will administer ARP. The heart of the program is the state assuming risk to help pay for treatment of 33 high-cost medical conditions. "The ARP is a state-operated reinsurance program which covers claims in the individual market for individuals with one or more of 33 identified high-cost conditions to help stabilize premiums," the CMS Fact Sheet says.
In a letter sent to the country's governors in March, Tom Price, MD, secretary of the Department of Health and Human Services, encouraged states to consider filing 1332 Waivers. "State Innovation Waivers that implement high-risk pool/state-operated reinsurance programs may be an opportunity for states to lower premiums for consumers, improve market stability, and increase consumer choice," Price wrote.
Although the expected annual budget and costs associated with ARP were not released Tuesday, CMS has committed federal "pass through funding" to help finance Alaska's reinsurance payments. ARP's deficit-neutral funding mechanism hinges on the program driving down HIX premiums, which in turn would drive down federal subsidies for health plans purchased on the exchange.
"As a result of the waiver approval, more consumers in Alaska may have coverage, consumers will see lower premiums, and the State will receive federal funds to cover a substantial portion of State costs for the ARP," the CMS Fact Sheet says.
ARP is expected to reduce HIX premiums 20% next year, according to the fact sheet. Last year, CMS reported that Alaska residents purchased about 23,000 health plans on the Obamacare exchange, which is administered on the CMS-maintained enrollment platform, HealthCare.gov.
Alaska's 1332 Waiver is effective from Jan. 1, 2018, to Dec. 31, 2022.
Christopher Cheney is the CMO editor at HealthLeaders.