The Affordable Care Act (ACA) created new federal standards for health insurance while maintaining the historic role of states to regulate and innovate within their own insurance markets. To support that role, last month, the Department of Health & Human Services (HHS) awarded $8.6 million in grants to 30 states and the District of Columbia to provide additional support to implement certain ACA market reforms.
The two-year grants stem from $250 million appropriated under the ACA for HHS to award state rate review grants. Funds leftover after fiscal year 2014 became available for HHS to provide grants for implementation of federal market reforms and consumer protections at the state level. This round of grants, the “State Flexibility to Stabilize the Market Grant Program,” aims to fund state efforts to adhere to three of the ACA’s reforms: guaranteed issue, guaranteed renewal, and the Essential Health Benefits (EHB). The fairly broad solicitation elicited a range of responses from states, all of which received funding. CHIR took a look at state press releases and information provided by the Center for Consumer Information and Insurance Oversight (CCIIO) to see what states plan to do with the money, and what tops the list of state market stabilization and consumer protection priorities.
States are considering changes to their EHB benchmark plans
More than half of the states awarded grants plan to focus at least part of their funded efforts on the ACA’s EHB requirements, and several will explore changes to their EHB benchmark plans. In the Notice of Benefit and Payment Parameters for 2019, HHS relaxed standards for state selection of an EHB benchmark plan. Beginning in plan year 2020, states have the freedom to replace portions, or the entirety of their benchmark plan, with that of another state, and states can also give insurers permission to substitute benefits between categories if they are actuarially equivalent.
Some states, such as Tennessee and South Dakota, are looking at ways to modify their benchmark plan with a goal of lowering premiums, which may entail reducing the depth or breadth of coverage for services in the ten EHB categories. Tennessee, for example, plans to review neighboring state benchmark plans with lower average premiums, and evaluate the “cost driver[s]” in current pharmacy benefits, suggesting the state’s intent to slim down benefit requirements to lower premiums. On the other hand, Illinois, which recently altered its benchmark plan to include services that help address the opioid epidemic, received a grant to look for other opportunities to revise their plan while “maintain[ing] comprehensiveness of coverage and generosity of benefits.”
Funding will go to state analyses of how non-ACA-compliant coverage will impact insurance markets
States are also using grants to respond to the expansion of alternative coverage options. At the time of application, the Trump administration had proposed rules to expand the availability of insurance products that do not have to comply with all of the ACA’s rules. Since then, final rules have been issued to expand both association health plans (AHPs) and short-term, limited-duration insurance (STLDI).
Some states are using money to evaluate the impact of these policies on market stability and consumers. Virginia, for example, plans to estimate the impact of STLDI on enrollment and plan affordability in the ACA-compliant market. The District of Columbia will also analyze the potential effects of non-ACA-compliant coverage on the individual market, and plans to issue guidance to issuers based on the findings of its study. Wyoming is considering the potential benefits of expanding alternative coverage by assessing whether uninsured and unsubsidized residents will be able to find coverage through STLDI and AHPs, but also plans to investigate the potential for discriminatory plan designs in these alternative coverage arrangements.
Some states are looking to reinsurance and high-risk pools to stabilize their market
A handful of states plan to use federal funding to study the impact of certain risk stabilization mechanisms, namely reinsurance and high-risk pools. Colorado, which recently considered legislation to implement a state reinsurance program, received funding to commission actuarial research on reinsurance as a potential tool for market stabilization. New Jersey, which recently received federal approval for a state reinsurance program, will fund an actuarial analysis to provide information for the further development of its program. Other states, like Arkansas, plan to study reinsurance and high-risk pools as options to reduce premiums and provide market stability.
Other funded efforts will examine mental health parity, network adequacy, and more
CCIIO funded a wide range of state activities in addition to those mentioned above. Virginia, Washington and West Virginia plan to use funds to enhance mental health parity. Other states, including Idaho, will address network adequacy issues. Alaska and Maryland will look into barriers to accessing health coverage in rural areas, while Utah is evaluating the viability of applying for a 1332 waiver. And several states including Nevada and Mississippi, are using at least part of their federal funding to tackle the issue of discriminatory plan design.
As states look for ways to stabilize their markets, many are taking steps to bolster the ACA’s reforms, while others are exploring ways to relax federal rules. You can access summaries of each state’s proposal here:
Alaska, Arkansas, Colorado, District of Columbia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Utah, Virginia, Washington, West Virginia, Wyoming