Health insurance access and State Innovation Waivers

By | October 20, 2016

obamacareA small section of the Affordable Care Act (ACA) packs a potentially big punch: State Innovation Waivers allow states to ask the federal government for authority to change parts of the ACA, namely the individual and employer mandates, establishment of state exchanges, and financial help to purchase insurance.  These waivers can be used by states in big and small ways to improve health insurance access.

Health insurance access is already on the rise, thanks in part to the ACA.  The Census Bureau just released a report showing that insurance rates rose by four percent from 2013 to 2015, with health insurance coverage at over 90% nationally in 2015.  Gains in insurance coverage appeared across different demographics, including across income bands.  However, income disparities in coverage remain; low-income Americans are more likely to be uninsured than high-income Americans.

A recent article by Benitez and colleagues of the University of Louisville, Kentucky, published ahead of print in Medical Care last month, tells a similar story in the state of Kentucky.  Study authors found that insurance rates rose significantly after the implementation of the ACA in that state.  Interestingly, disparities in coverage across age and marital status effectively disappeared. Hispanics, people with low incomes, and people who were unemployed still made up a disproportionate part of the uninsured population.

As both studies show, even with gains health insurance access may still be an issue for some. State Innovation Waivers offer the opportunity to build on the ACA and further address access issues. Recent federal guidance has led health policy experts to note that using these waivers for some reforms such as increased subsidies are unlikely in the near term.  State Innovation Waivers may not lead to broad reforms just yet, but states are on their way towards addressing health insurance access using these waivers.

California submitted a State Innovation Waiver application to the federal government at the end of September, asking permission for undocumented immigrants to purchase health insurance at full price on the state’s Exchange.  The state is asking for permission to offer look-alike coverage on its Exchange to undocumented immigrants, in order to increase health insurance access and streamline the application process. Though affected immigrants will not have access to premium or cost-sharing help, simply gaining access to the market for health insurance could have a protective effect on household finances.

Hawai’i submitted a waiver application [PDF] to preserve its system of coverage, called Prepaid, in which almost all employers offer generous coverage to almost all employees.  With an uninsured rate at 4.1%, Hawai’i is keen to keep its system in place and avoiding unintended consequences if individuals were to lose employer-sponsored insurance.  The state asked for waivers from ACA requirements that would interfere with the current functioning of Prepaid.  For example, Hawai’i asked that small employers continue to purchase insurance directly from insurers, rather than going through an ACA-established exchange for small businesses known as Small Business Health Option Program (SHOP Exchange).

Vermont also asked for a waiver [PDF] from participating in a SHOP Exchange.  When the state faced technological issues with setting up its individual and SHOP Exchanges in 2014, it used transitional flexibility from the federal government to allow small employers to directly enroll with qualified insurance carriers instead of using the SHOP Exchange.  The system appears to be working, with the highest small group enrollment out of states with state-based Exchanges.  Vermont would like to keep that system in place.

California, Hawai’i, and Vermont are asking for relatively small changes to the ACA compared to what is allowed under the ACA, but do offer opportunities for the states to improve or preserve access and reduce state costs.  These requests represent some first attempts at building on the ACA’s success with health insurance access.

Rachel Gershon

Rachel Gershon

Rachel Gershon JD MPH is a health policy attorney at the Center for Health Law and Economics at UMass Medical School. Her work focuses on the Affordable Care Act, health care affordability, and language access. Previously, Ms. Gershon advised and represented individuals who receive public benefits, including through Medicaid and Social Security. Ms. Gershon holds a law degree and a master's degree in public health from Harvard University, and a bachelor's degree in psychology from Whitworth University. Disclaimer: The views expressed are those of the author and do not necessarily reflect those of UMass Medical School.
Rachel Gershon
Rachel Gershon

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About Rachel Gershon

Rachel Gershon JD MPH is a health policy attorney at the Center for Health Law and Economics at UMass Medical School. Her work focuses on the Affordable Care Act, health care affordability, and language access. Previously, Ms. Gershon advised and represented individuals who receive public benefits, including through Medicaid and Social Security. Ms. Gershon holds a law degree and a master’s degree in public health from Harvard University, and a bachelor’s degree in psychology from Whitworth University. Disclaimer: The views expressed are those of the author and do not necessarily reflect those of UMass Medical School.