A Georgia plan to eliminate the state’s use of the Obamacare insurance market is on hold after the federal government agreed to the Peach State’s request to delay review of the proposal.
The Departments of Health and Human Services and Treasury deemed only the first phase of the state’s plan complete on Thursday and agreed to delay the state’s second, boldest phase.
The first phase proposes a reinsurance program that would start in 2021. A reinsurance program provides payments to insurers to offset the costs of enrollees with big medical claims and enables insurers to lower premiums.
Georgia plans to use a combination of federal pass-through funds and state general funds for the program. Federal pass-through funds are funds the state collects for saving the federal government money.
The agencies have 180 days to approve or deny this phase once it’s deemed complete. The agencies said they will accept public comment on the first phase of the plan through March 7.
In the second phase, Georgia is seeking federal approval to overhaul federal subsidies for the individual market and have residents shop around for coverage with private insurance companies rather than access the federal exchange starting in 2022.
The federal government also asked the state for information on changes in employers’ behavior if the proposal was approved; whether Georgia would reconcile state subsidies to reflect actual income levels for the year; and to provide data on ages, health expenses, and health insurance status of people in Georgia who would be affected, as well as the number of employers and employees impacted.
Georgia is not planning to create a new exchange to replace the one-stop shopping experience residents get now through HealthCare.gov. Instead, residents would use commercial market web brokers or buy directly from carriers, making the state the first to be exempted from using the federal exchange.
The state says its plan is designed to reduce premiums, increase coverage, and promote a more competitive private insurance marketplace.
“Through this proposal, Georgians will have access to more insurance options—not currently offered on Healthcare.gov—that cover those with pre-existing conditions,” Georgia Gov. Brian Kemp (R) said in a November op-ed.
However, health policy experts fear the number of uninsured people in the state would rise under the proposal and those who purchase coverage could wind up with less comprehensive plans or pay more in premiums.
The state would receive a set amount of federal funding for subsidies for its residents, based on Treasury Department estimates of what the federal government would have spent under the existing system, the Center on Budget and Policy Priorities (CBPP) said in a report on the plan. The Washington nonprofit bills itself as a nonpartisan think tank that analyzes the impact of federal and state government budget policies. Georgia would determine who is eligible for state-based subsidies.
The state would make up the difference, but would cap the amount it would spends on both the reinsurance program and the state subsidies provided under the Georgia Access model at $255 million for plan year 2022. That cap would be evaluated yearly throughout the period of the waiver, the proposal said.
Critics worry Georgians will get confused by having to go to multiple vendors to figure out what their options are for health insurance.
“Many people get confused by that amount of shopping and don’t enroll at all,” Tara Straw, a senior health policy analyst at the CBPP, said. “Georgia thinks it’s good to have increased choice but if [consumers] can’t see an apples-to-apples comparison of plans, it’s easy to fall into a plan that’s not the right fit for them.”
‘Flaws So Severe’
If the HHS approves this proposal, its decision would likely face legal challenges, health policy experts at the CBPP and the Brookings Institution said.
To qualify for a waiver from the requirements of the ACA, the state coverage must be as affordable and as comprehensive as federal coverage, it has to cover as many people, and it can’t add to the deficit, said Christen Linke Young, a fellow at USC-Brookings Schaeffer Initiative for Health Policy, told reporters on a call Jan. 23 with the CBPP.
“Georgia’s waiver fails to satisfy some of these guardrails, which means the federal government simply doesn’t have authority to approve the waiver and if they did try to approve it, then everyone involved should expect to wind up in court,” she said.
The ACA also requires waiver proposals to have a detailed economic and actuarial analysis that includes information on how the proposal is expected to affect coverage and the federal budget.
“Georgia’s waiver includes such an analysis, but it has flaws so severe that is cannot support waiver approval,” Jason Levitis, a nonresident fellow at the USC-Brookings Schaeffer Initiative for Health Policy, said on the call.
The analysis fails to consider the cost of major components of the waiver—like lost federal revenue—and includes analytical assumptions that are either unfounded or implausible, he said, noting the waiver’s assumption that 25 additional people will enroll in coverage.