The Centers for Medicare & Medicaid Services (CMS) and the Department of the Treasury issued new guidance on Nov. 29, allowing states to move their insurance markets away from what they called the “one-size-fits-all” rules and regulations imposed by the Affordable Care Act (ACA, or Obamacare) and increase choice and competition within their insurance markets.
CMS Administrator Seema Verma
The guidance grants states more flexibility to design alternatives to the ACA and to give Americans more options to get health coverage that better meets their needs.
Under this new policy, states will be able to pursue waivers to improve their insurance markets, increase affordable coverage options for their residents, and ensure that people with pre-existing conditions are protected. These waivers are called State Relief and Empowerment Waivers to reflect this new direction and opportunity, according to a press release announcing the guidance.
“Seeing the problems the ACA created and seeing the lack of federal action to address these problems should be proof enough for why it was such a mistake to federalize so much of health care policy under the ACA,” CMS Administrator Seema Verma explained in announcing the new direction.
One of the options available under the new guidance is for states to use federal subsidy funds to allow citizens to purchase health insurance and even pay out-of-pocket expenses. CMS calls this an account-based program: “The account-based approach would allow a state to provide a cash contribution to an account that people can use to pay both premiums and any out-of-pocket health expenses. ”
The fund could be paid for through the tax credits in Obamacare, through a small business health tax credit, or by collecting individual or employer contributions.
Other options include:
- States can develop a new premium subsidy structure and decide how those premium subsidies should be targeted;
- States can set the rules for what type of health plan is eligible for state premium subsidies to give people access to more health plan options; and
- States can implement risk stabilization strategies to address the costs of high risk individuals to reduce premiums in the market for everyone.