For millions, healthcare waivers offer hope

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By Kyle Wingfield

Georgia Public Policy Foundation

Georgians received a dose of good news Thursday, as Gov. Brian Kemp announced federal approval of his plans to increase healthcare access and affordability.

Seema Verma, head of the Centers for Medicare and Medicaid Services, joined Kemp to put the Trump administration’s official seal of approval on the pair of “waivers” — one to allow for a new, more cost-effective way to cover some of Georgia’s working poor, and another to extricate Georgia from some of the strictures of the Affordable Care Act, or Obamacare.

Of the twin plans, the two-part ACA waiver is the more innovative. First, Georgia will join other states in creating a “reinsurance” program that directly subsidizes the care of Georgians with the largest healthcare bills, rather than dumping those costs onto the relatively few people buying individual insurance. The state expects to reduce these individuals’ premiums, which have soared under the ACA, by an average of 10% statewide — with larger increases in the areas, primarily in rural Georgia, where premiums are most expensive.

But the second part is where Georgia is blazing a new trail. It is the first state to go beyond reinsurance and depart from some of the harmful restrictions the ACA placed on the individual insurance market.

No longer will Georgians be limited to the federal marketplace, Healthcare.gov, to buy individual insurance plans. Instead, shoppers will be able to see a wider array of options via private sellers. Brokers and insurance carriers will be able to show consumers not only the subsidized, but very expensive, ACA plans, but other types of coverage that may cost them even less out of pocket. Injecting more competition and options into this marketplace is a crucial step toward reining in prices and giving Georgians better access to care.

It’s not as if Healthcare.gov has been working well for Georgians. Between its 2016 peak and last year, Georgia’s enrollment on that marketplace fell by about 129,000 people, or 22%. Even more telling, most Georgians who are eligible for subsidies on the marketplace choose not to buy plans. In 2019, just under 338,000 Georgians used subsidies to enroll in plans via HealthCare.gov. Yet, about three times as many Georgians were eligible for financial assistance.

Clearly, it was time to make a change. Between the two parts of the ACA waiver, tens of thousands of Georgians are expected to gain insurance, while hundreds of thousands will benefit from lower premiums. Taxpayer subsidies for insurance should also fall, offsetting the vast majority of the cost of the reinsurance program.

The other plan approved Thursday provides a new approach to Medicaid, the program for low-income Americans. Georgia will create a new way for those who are healthy enough to work but earn less than the federal poverty level — $12,760 this year for a single adult — to enroll in Medicaid. These Georgians will qualify if they spend at least 80 hours per month working or doing a related activity, such as vocational training.

If they have a job and their employer offers insurance, the program may pay their share of the premium to enroll them in that coverage. Otherwise, they will be enrolled in a more traditional Medicaid plan. To prevent the kind of budget blowout that Medicaid expansion caused in numerous states, the program caps how much the state will contribute, with the federal government matching that amount 2 to 1.

Once it’s ramped up, the program is projected to cover about 50,000 Georgians each year. But they may not be the same people year to year. Unlike the traditional Medicaid program, this plan is not designed to discourage people from earning more money and losing their insurance. Instead, it will help provide a smoother transition to private insurance markets. So, as some people climb the income ladder and move out of the program, new people will enter it — extending the impact to more Georgians. During Thursday’s announcement, Kemp said up to 270,000 Georgians may ultimately benefit.

Taken together, these plans are exactly the kinds of state-level reforms that need to be made. But as Verma said Thursday, for years “states have been treated inside the Beltway less like laboratories of democracy, and more like being forced to play ‘Mother, May I?’ with Washington, D.C.” It’s better, she said, “to empower states, because we know the best ideas don’t come from Washington. They come from you who are on the front lines.”

Whichever party controls Washington after next month’s election would do well to keep that policy.

[Kyle Wingfield is President and CEO of the Georgia Public Policy Foundation. Established in 1991, the Foundation is a trusted, independent resource for voters and elected officials. The Foundation provides actionable solutions to real-life problems by bringing people together. © Georgia Public Policy Foundation (October 16, 2020).]