Federal approval of Kemp ACA waiver contains last-minute surprises

The Trump and Kemp administrations have struck a deal to block Georgians' access to healthcare.gov, the Affordable Care Act's Marketplace exchange website where 400,000 Georgians buy their health insurance plans.  But that won't be at issue until 2023.  Open enrollment is currently underway for plans that begin coverage Jan. 1, 2021.  (PHOTO screenshot of USHHS website healthcare.gov)
The Trump and Kemp administrations have struck a deal to block Georgians' access to healthcare.gov, the Affordable Care Act's Marketplace exchange website where 400,000 Georgians buy their health insurance plans. But that won't be at issue until 2023. Open enrollment is currently underway for plans that begin coverage Jan. 1, 2021. (PHOTO screenshot of USHHS website healthcare.gov)

Credit: Screenshot by Bita Honarvar

Credit: Screenshot by Bita Honarvar

Attempts to block future administrations from making changes to Kemp-Trump health revamp

President Trump and Governor Brian Kemp hope that no matter who wins Tuesday’s election, their plan to block healthcare.gov shopping under the Affordable Care Act for Georgians and to revamp individual health insurance is here to stay.

On Sunday, with the election two days away, the Trump administration signed off on its “waiver” agreement with Georgia. It’s the latest of more than a dozen states that have reached agreements with the federal government to tailor the Obamacare health insurance market, and by far the most unconventional.

And as Trump officials raced to do it, they added a unique clause at the end, which appears to tie the hands of any future administration to undo the work.

An administration’s action to “suspend, modify or terminate the waiver” in any way not provided for in the Trump administration’s contract, it reads, “would constitute a material breach” of the contract. And if that happens, it says, “the parties agree that damages at law” — a financial payout — “would not provide an adequate legal remedy.”

Essentially, the adequate remedy would be to reinstate the waiver.

Waiver contracts with other states had clauses on the federal government’s “Right to Amend, Suspend or Terminate” a waiver if a state doesn’t hold up its end, but Georgia’s inserts the word “only." The feds can weaken or yank the program “only” if the state doesn’t hold up its end.

From all appearances, “they’re rushing to put this in place to tie the hands of a future administration,” said Katie Keith, who teaches health law at Georgetown University.

In addition, the document, signed by Seema Verma, administrator of the Centers for Medicare and Medicaid Services, paves a path for the Kemp administration to take the user fees that insurers pay to list plans on healthcare.gov and use those funds to pay for the “reinsurance” plan to lower premium prices for higher-income policyholders after its first year.

In the most recent year, the Georgia fees added up to just over $90 million.

A spokesman for the governor, Cody Hall, said the money to run healthcare.gov comes from premiums of consumers looking for subsidized health insurance plans, and such plans will still exist. Consumers just won’t be able to find them on healthcare.gov.

Legal experts said the new clauses were just the most recent unusual provisions of the waiver that were certain to land it in court. Groups that track state waivers have been closely watching Georgia’s, and some have said it appears illegal and that they were reviewing it for possible legal action.

A supporter of the Kemp waivers defended both moves. States have to be able to rely on contracts they sign, said Kyle Wingfield, president of the Georgia Public Policy Foundation, a libertarian-leaning think tank.

“I would think there’s a fairness question when a state devotes the better part of two years to pursuing a waiver and doing the analysis and has the potential of having the rug pulled out from the state,” Wingfield said. As to moving the money from one program to the other, he said, the fee money originates with everyone who buys a policy, rich or poor. Lowering premium costs for higher-income people benefits the lower-income policyholders, too, in theory, he said, even if they don’t feel it in their pocketbooks.

“Everybody who buys a plan will benefit from the lower reinsurance premiums,” Wingfield said. “The only difference is whether you feel it or not.”

Some 400,000 Georgians buy their health insurance on healthcare.gov. On that website consumers see only robust plans that cover essential benefits such as psychiatric care or prescriptions; they also see the exact price they’d pay after subsidies. Plans are listed alongside each other for the consumer to compare.

Kemp plans to block Georgians' access to that site and route them instead to contact information for private agents and web brokers. Critics say the private industry has a track record of misleading consumers into buying products that don’t cover what they thought. Hall says the private agents and brokers will be more incentivized to enroll the uninsured.

“We feel confident that this can be accomplished at lower cost and provide greater benefit than a government-run website that consumers must use to purchase a subsidized private sector insurance plan,” Hall said.

The state’s ability to take over charging insurance companies and use the fees for reinsurance was not clear from the waiver application. It stated that in the plan’s initial year, the reinsurance program would be paid for by state tax money. It didn’t say what would happen in future years.

The letter by CMS Administrator Verma to Kemp says that the plan to revamp healthcare.gov shopping and the reinsurance program can be funded with state tax money “and/or a state user fee."

However, Hall pointed out that at the moment, state law requires the money for reinsurance to come from state tax funds.

Laura Colbert, president of Georgians for a Healthy Future, which supports the ACA, said the changes will move resources to help those who make more money.

"The governor’s plan pits affordability for middle- and high-income consumers against access and comprehensive coverage for lower and moderate-income Georgians,” Colbert said in a statement.

Whatever the merits of blocking healthcare.gov shopping, Keith said, scooping up the money that used to run it “is one of the major benefits" for states. Most states, however, direct that money to setting up their own exchange website.

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