Feds Open Door to Subsidizing non-ACA Plans

Last week CMS released new guidance urging states for states to start offering federal subsidies to people buying plans that don’t comply with the ACA.  Their objective is to provide subsidy options for short-term and association health plans, which offer fewer benefits and consumer protections but at a lower cost.  They’ve branded the new subsidy system "State Empowerment and Relief Waivers

If the program stands up to a judicial review, states will be able to who is eligible for health insurance subsidies. Under the ACA, anyone with an income 400% of the federal poverty line is eligible for subsidies on the insurance marketplace. This new guidance would allow states to add to that regulation, like prioritizing younger, healthier populations over lower-income residents.  Importantly, any waiver request would still need to meet the ACA standard that it ensures the waiver plan meets the four statutory standards relating to comprehensiveness, affordability, coverage, and federal deficit neutrality.

Included in last week’s announcement is a provision giving states a way to better manage risk in their Marketplace plans. The Risk Stabilization Strategy that they announced gives states a way to implement reinsurance programs or high-risk pools. Reinsurance programs can lower premiums by providing some protection from expensive risk pools.  Examples are a “claims cost-based model”, a “conditions-based model”, and a hybrid conditions and claims cost-based model.