In Trump’s plans for healthcare reform, individual states were a high priority in allowing more localized power from state-to-state. While the American American Healthcare Act (AHCA) has since collapsed, the urging of states to take an active role in their healthcare carries on. Letters to governors from the Department of Health and Human Services (HHS) and Centers for Medicare and Medicaid Services (CMS) discussed Section 1332, State Innovation Waivers, where states can develop their own individual healthcare systems provided they still comply with certain requirements of the Affordable Care Act.
States like Hawaii seemed to have it figured out, and now add Alaska and Minnesota to that list. This past year, both states endured huge hits with premium jumps and have since searched for their own options to remedy the situation. Last week, Minnesota joined Alaska in adopting a “reinsurance” program, aiming to lower premium spikes by using state funding.
In Minnesota’s case, some policyholders were incredibly sick, driving up costs for the insurers. This reinsurance program would reimburse these insurers with state funds, as opposed to the insurers making up the difference by hiking up premiums. Alaska did this over the course of two years with $55 million in state dollars. The result created a reduction from a 42% premium increase to only 7%. Minnesota seeks to use $542 million for their back pay fund, after having already provided $326 million in credits to residents utilizing their state run health exchange and still suffering from high premiums. While Alaska already submitted its Section 1332 form in 2016, Minnesota will be doing so next, and these funds are a step in the right direction to increase their autonomy to better serve their residents.
However, complexities are inevitable when it comes to individual states and their abilities to reform their own healthcare. In rural areas, it’s more costly to provide healthcare when there’s less competition amongst providers. Further, Section 1332 waivers suggest that instead of utilizing state funds for subsidies, the spending goes to building state-run insurance platforms, with funds like the aforementioned “reinsurance” programs, along with adopting high-risk pools for those who are likely to use more insurance than others and therefore cost more. By taking all of these steps, the brunt of spending is shifted away from the federal government to the states.
While this would seem to be a workable plan from a distance, a big issue lies in getting all of the players on board. Take Minnesota, where Democratic Governor Mark Dayton attempted to transform MinnesotaCare—Minnesota’s platform for lower-income people ineligible for Medicaid—into an option for anyone in the state. The proposal was shot down.
Or Vermont, which sought to create a single-payer system in 2014, but lost it after false starts and seemingly no structured financial action plan. Likewise, Colorado’s single-payer system proposal was flatly rejected by voters in 2016. Oklahoma is looking to file a Section 1332 waiver, which would involve a number of plans including moving subsidies to solely lower class options.
While states are actively pursuing information on Section 1332 to address each individual state’s respective concerns, the fallout may be a patchwork of healthcare systems throughout the nation. What works in one state may not work in another state.
