Today, the Centers for Medicare & Medicaid Services (CMS) and the Department of the Treasury, announced the approval of Pennsylvania’s request to implement a section 1332 State Relief and Empowerment waiver (also referred to as a section 1332 waiver). Through this waiver, Pennsylvania will run a state-based reinsurance program for plan years 2021 through 2025 to partially reimburse insurers for certain high-cost claims for consumers in the individual health insurance market. The reinsurance program reduces costs for everyone in the individual market and is projected to reduce premiums by approximately 4.6 percent in Pennsylvania in plan year 2021. This waiver will also reduce premiums for those affected by COVID-19 who lost coverage and are enrolling in individual market coverage or will enroll in coverage during open enrollment. The approval of this waiver builds on President Trump’s executive order that directed agencies to take actions to minimize the economic burden of the Patient Protection and Affordable Care Act (PPACA) and provide greater flexibility to states.
“Under Obamacare, average premium rates for a benchmark plan on HealthCare.gov increased by about 62 percent, with average rates in Pennsylvania climbing by approximately 76 percent,” says CMS Administrator Seema Verma. “The Trump Administration has stabilized rates over the past two years nationally and in Pennsylvania, but rates are still unaffordable for far too many, especially people who don’t qualify for subsidies. This waiver will deliver lower premiums and give Pennsylvania an opportunity to further strengthen its individual market by providing more affordable choices and increasing competition.”
The purpose of these State Relief and Empowerment waivers is to empower states to develop new healthcare programs and solutions that would not otherwise be possible under the current requirements of the PPACA. Under section 1332 of the PPACA, these waivers allow states to waive certain provisions of the PPACA as long as the waiver meets specific statutory criteria, also referred to as “guardrails,” that require that people retain access to coverage under the waiver that is at least as comprehensive and affordable as would be available without the waiver, the waiver covers as many individuals, and the waiver does not increase the Federal deficit.
Today’s approval of Pennsylvania’s reinsurance waiver clears the way for more consumers in Pennsylvania to have coverage options with lower premiums, while leveraging Federal funds, called pass-through funding, to cover a substantial portion of state costs for the state-based reinsurance program. Reinsurance provides a direct benefit to consumers by paying a portion of provider claims that would otherwise be paid by consumers through higher premiums and also lowering premiums for people in the individual health insurance market. Reinsurance programs have real impacts on consumers and their ability to afford health care.
As of today, CMS and Treasury have approved fourteen state waiver requests, thirteen of which are to implement state-based reinsurance programs. According to a recent data brief issued by CMS, section 1332 state-based reinsurance waivers have resulted in a statewide average premium reduction ranging from 3-40 percent for residents in states with approved waivers. CMS continues to encourage other states to take advantage of the flexibilities available through section 1332 waivers in order to pursue solutions to help lower costs and increase coverage choices for Americans faced with unaffordable premiums and reduced competition in the insurance market.
To view the Pennsylvania 1332 waiver fact sheet, visit: https://www.cms.gov/CCIIO/Programs-and-Initiatives/State-Innovation-Waivers/Downloads/1332-PA-Fact-Sheet.pdf
To view the Pennsylvania 1332 waiver approval letter, visit: https://www.cms.gov/CCIIO/Programs-and-Initiatives/State-Innovation-Waivers/Downloads/1332-PA-Approval-STCs.pdf
To learn more about Section 1332 waivers, visit: https://www.cms.gov/CCIIO/Programs-and-Initiatives/State-Innovation-Waivers/Section_1332_State_Innovation_Waivers-
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