2020 Prediction: More State Waivers and Activity Related to Major Health Policy Litigation and Federal Regulations

Many major health policy developments in 2019 were related to state waivers, major health policy litigation, and federal health insurance regulations, with activity on these issues expected to continue into 2020. One of these developments—this week’s new ruling in the Texas vs United States case challenging the validity of the Affordable Care Act (ACA)—is certain to draw significant interest and attention as we move into the coming year. Below, Health Policy News recaps the ruling and other important 2019 health policy happenings across these three categories, along with predictions of what 2020 will bring.

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Developments Relative to State Waivers

Medicaid Global Waiver

Throughout 2019, Health Policy News shared updates on Tennessee’s efforts to secure a Medicaid block grant through a global waiver. We first reported on Tennessee Governor Billy Lee’s interest in pursuing this Medicaid funding model in our March state healthcare reform roundup. In May, we posted about the state’s first tangible step forward in this process: the passage of state legislation requiring the state to submit a block grant proposal to the federal government within six months. Most recently, in September, we summarized the state’s resulting draft waiver amendment.

Just last month, after updating the original proposal to account for significant critique it received during the state’s required public comment period, Tennessee submitted its updated final waiver amendment application. CMS deemed the application complete and is currently accepting public comments on the proposal.

The updated application does not, for the most part, specifically outline how the state will enact changes to the Medicaid program. Instead, it seeks block grant funding for providing “core medical services” to its core population, free from “excessive or unnecessary federal intervention” so that the state can structure the program as it chooses. The proposed amendment specifically requests flexibility relative to prescription drug formularies, optional State Plan benefits, varying benefits across populations, funding for items and services not ordinarily reimbursable, enrollment processes, the service delivery system and covered populations.

The state maintained the draft amendment’s request for per capita funding that will automatically adjust for enrollment growth, as well as its request to share in savings—under the proposed amendment, the state will retain half of federal savings. The proposal outlines investments that Tennessee intends to make, including improvements to prenatal and postpartum care, expanded coverage for needy individuals, elimination of the wait list for services for people with intellectual and developmental disabilities and inclusion of services to address state-specific health crises, such as the opioid epidemic and maternal and infant mortality without documenting specific plans or requests related to those priorities.

Looking forward, 2020 will provide further clarity on CMS’s stance on block grant waivers. Though the federal administration has expressed interest in supporting this Medicaid funding model, its activity on the issue stalled this fall. With the recent decision by the federal Department of Health and Human Services to withdraw a State Medicaid Director Letter draft, which was undergoing review and expected to address block grants, the decision on Tennessee’s waiver amendment request is likely to be the first tangible federal action taken on this issue. The federal response to Tennessee’s proposal will not just be meaningful for Tennessee, but also for other states contemplating similar requests.

Section 1332 Waivers

2019 also brought a new round of Section 1332 Waiver activity at both the state and federal level. Six states—Colorado, Delaware, Idaho, Montana, North Dakota and Rhode Island—submitted Section 1332 Waiver applications in 2019. Each of the approved applications were for state-based reinsurance programs funded, in part, by pass-through savings. On the process side, federal reviews of the 2019 applications continued to be completed quickly; with the exception of Idaho’s waiver, which was found to be incomplete during the initial review, all submitted state waiver applications were approved in three months or fewer. See the graphic below for a state-by-state breakdown of these approval timeframes:


In addition to reviewing state applications, the federal government also shared guidance and tools aimed at encouraging other states to pursue Section 1332 Waivers. Early in 2019, the United States Department of the Treasury and the Centers for Medicare and Medicaid Services (CMS) released several pass-through funding resources[1]. Later in the year, CMS released four waiver concept papers and application templates as well as accompanying guidance[2], including an updated Section 1332 waiver checklist. Risk Stabilization Strategies, including state-based reinsurance programs, were highlighted within the CMS concept papers. CMS also released concepts and template applications relative to State-Specific Premium Assistance, Adjusted Plan Options and Account-Based Subsidies.

It is likely that state activity around Section 1332 Waivers will continue into 2020. Multiple states have draft waiver applications out for public comment at the state level, including Pennsylvania and Georgia. While both of these waiver requests include the creation of a state-based reinsurance program, Georgia’s waiver outlines a two-phased approach that also entails waiving the establishment of an Exchange and establishing state-administered premium tax subsidies that could be used to purchase Qualified Health Plans (QHPs) and non-QHPs with more limited coverage than allowed under the Affordable Care Act.

Not only will 2020 reveal the federal administration’s response to Georgia’s new waiver approach; it will also reveal other states’ level of interest in pursuing CMS’s broader waiver concepts.

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Developments Relative to Key Litigation

Texas v. United States

This week brought a new development in the pending litigation challenging the ACA broadly, Texas vs. United States—which we last covered in our April 2019 litigation round-up. This most recent ruling, handed down by a three-judge panel of the Federal Appeals Court hearing the case, agreed with the lower-court judge’s finding that the ACA’s individual mandate is unconstitutional now that the tax penalty has been eliminated. However, the panel refused to render a decision about the impact of this finding on the validity of the law overall. The panel instead sent the case back to the original District Court with instructions that the judge, who originally found the entire law invalid, “employ a finer-tooth comb” in determining which provisions of the ACA are inseverable from the individual mandate and, therefore, impacted by the ruling.

As we enter 2020, all eyes once again turn to the District Court and, subsequently, a likely request that the full Appeals Court hear the case. Ultimately, the final Texas v. United States verdict will likely turn on a decision by the United States Supreme Court.

Litigation Relative to the Association Health Plans (AHPs) Final Rule

Health Policy News first reported on the U.S. Department of Labor’s (DOL) new rule expanding access to Association Health Plans (AHPs) in 2018. Activity on this final rule continued into 2019, and, in May, Health Policy News reported on the resultant new guidance on AHPs.

However, the litigation against the rule also continues. Just last month, a three-judge panel of the Federal Court of Appeals for the District of Columbia heard oral arguments on the dispute over the AHP regulations after the administration appealed the District Court’s judgement. 2020 will bring a ruling from the three-judge panel and reveal future appeals.

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Other Developments Relative to Health Insurance Regulations

Health Reimbursement Arrangements (HRAs) Final Rule

The coming year will also bring initial insight into the impact of the new rule on Health Reimbursement Arrangements, which allows employers to fund individual market premiums for their employees through HRAs. All eyes are on employers (and brokers) to see if this new option proves to be appealing.

2021 Guidance for Marketplaces and Qualified Health Plans (QHPs)

It is likely that the guidance for Marketplaces and QHPs for 2021 will come early in 2020, similar to this year’s release timeline. In addition to addressing the typical operational and financial rules relative to Marketplaces and QHPs, the release will reveal whether CMS intends to act on the practice of “silver-loading”—a practice under which many issuers (some under state direction) have concentrated the premium increases on QHPs that result from the lack of cost-sharing reductions (CSRs) payments on plans within the “Silver” metal level tier, since those are the only marketplace plans eligible for CSRs.

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[1] Full list of resources can be found under the header “Application Tools and Resources” on the Section 1332 Waiver webpage here.

[2] Links to individual 1332 waiver concepts and application templates:

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