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Analysis

Verma Seeks to Clarify Commitment to Preexisting Condition Protections

By Steven Porter  
   April 24, 2019

The CMS administrator said states won't be granted ACA waivers for proposals that would undermine access and affordability. Some say her verbal commitment is more stringent than the administration's own written guidance.

As state policymakers explore their options to allow health insurance outside the parameters established by the Affordable Care Act, the head of the Centers for Medicare & Medicaid Services sought Tuesday to clarify the agency's commitment to protecting people with preexisting conditions.

Kansas last week became the third state to allow its Farm Bureau to market non-ACA-compliant health plans, following Tennessee and Iowa, as The Topeka Capital-Journal reported. And regulation of other non-ACA-compliant plans—such as short-term limited-duration options, which are not required to cover people with preexisting conditions—varies widely from state to state, according to the Commonwealth Fund.

Proponents of the ACA have worried that rising popularity of plans that offer skimpier coverage than the minimum essential benefits outlined in the Obama-era law would prompt healthy consumers to leave the ACA-compliant market, resulting in higher premiums for those left behind. That concern was magnified last fall when the Trump administration overhauled ACA waivers in a way that would let states divert federal subsidies from ACA-compliant plans to short-term alternatives.

CMS Administrator Seema Verma acknowledged in November that states could propose to use federal subsidies to cover short-term limited-duration plans. But the agency would evaluate each waiver proposal against the four guardrails outlined in the law, she said.

Verma reiterated and sought to clarify that commitment Tuesday at a forum CMS hosted in Washington, D.C., with various stakeholders in the ACA's Section 1332 waivers, which the Trump administration has rebranded as "State Relief and Empowerment Waivers." The administration released new guidance governing the waivers in October, followed by four waiver concepts in November.

"Some have criticized the new guidance and waiver concepts because they claim that there's an opportunity for states to adopt waivers that undermine the individual market risk pool and, as a result, would make the market more expensive for people with preexisting conditions," Verma said Tuesday. "Critics claim that giving states the opportunity to offer new options to purchase health plans outside the individual market—such as short-term limited duration plans—could pull healthier people out of the market and undermine coverage available to people with preexisting conditions who remain in the market. Again, I want to make clear that a waiver cannot undermine coverage for people with preexisting conditions."

While the guidance gives states more flexibility, it does not abolish the statutory guardrails, so "any state waiver will need to carefully account for any impact on the individual market risk pool and guarantee that people with preexisting conditions continue to have access to coverage that is at least as comprehensive and as affordable as it is today," Verma said.

"So if a state is to allow subsidies to be used for short-term plans, they must have a solution for how to continue to guarantee access to the same level of affordability and comprehensiveness for those who remain in the individual market," she said.

Related: New ACA Waivers Could Subsidize Short-Term Coverage

Related: Verma Lambastes ACA, Gives States 4 Ways to Bypass It

Related: Short-Term Health Plans Allowed Up To 3 Years

"To be very clear, the new guidance does nothing to change the ACA's preexisting condition protections," Verma said. "The protections cannot be waived, and a waiver cannot be approved that might otherwise undermine these protections. And, regardless, this administration stands committed to protecting people with preexisting conditions."

Trump administration officials have voiced support for preexisting condition protections, but they have also asked federal courts to invalidate the ACA in its entirety. Republicans on Capitol Hill have proffered legislative proposals of their own to add preexisting condition protections outside the ACA, but those proposals have generally offered less protection than the ACA, as The New York Times' Robert Pear reported last week.

Matthew Fiedler, PhD, a fellow with the Brookings Institution Center for Health Policy who served as chief economist of the Council of Economic Advisers during the Obama administration, said he's puzzled by Verma's comments. The administration could have made such a commitment in writing when it revised the waiver guidance last fall, he said.

"But the guidance pointedly did not include such a standard," Fiedler told HealthLeaders in an email. "The disconnect between Verma's speech and the Administration's formal guidance leaves me a bit confused about how the Administration will judge waivers in practice."

Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

The administration's rebranded ACA waivers stoked fears last fall of a potential mass exodus from the ACA-compliant market.

Seema Verma sought to clarify this week that CMS won't approve waivers that would undermine coverage for those with preexisting conditions.

If a state wishes to subsidize short-term plans with federal money, it 'must have a solution' to protect coverage for those left behind, Verma said.

Some see Verma's verbal commitment as more stringent than the administration's written guidance.

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