Georgia’s Sec. 1332 Waiver Proposal Invites Legal Challenges

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On December 23, 2019, Georgia submitted a 1332 waiver application to the Centers for Medicare & Medicaid Services (CMS) to restructure the state’s insurance marketplace. Sec. 1332 of the Patient Protection and Affordable Care Act (ACA) allows states to make changes to their insurance marketplaces to provide their residents with high quality and affordable health insurance while retaining the ACA’s consumer protections. In 2018, the Trump Administration released new guidance that loosened the criteria that are used to evaluate Sec. 1332 waiver applications, which permit states to make broader changes to their health insurance marketplaces than was previously allowed. Georgia’s waiver application is the first one to be submitted with the new evaluation criteria in place.

Under Georgia’s proposal, the state would create a reinsurance program in 2021 and then exit the federal marketplace where health insurance plans are sold. Instead of using the healthcare.gov website for health insurance enrollment, the state would rely on private vendors to handle enrollment. Additionally, the state would transform the federal enrollment subsidies into a state-run program with a funding cap. The state originally included a proposal to subsidize non-ACA-compliant health plans, but later amended it to instead create “copper” plans that have 50 percent actuarial value and greater cost-sharing requirements than other plans.

Since the proposal was released, researchers with the USC-Brookings Schaeffer Initiative for Health Policy and the Center for Budget and Policy Priorities have released analyses that demonstrate why they believe Georgia’s waiver application should not be approved. Notably, the researchers found errors in the state’s actuarial analysis and flawed assumptions about the number of enrollees that would be added after the state transitions to private enrollment vendors. Additionally, Georgia did not allow public comment after adding the “copper” plans to the proposal when it was amended. CMS is required to respond to a Sec. 1332 waiver application to verify its completeness within 45 days, and the agency must approve a Sec. 1332 waiver application within 180 days. CMS is expected to respond to the state’s application in early February, but many expect the proposal to be challenged in court if it is approved because of several alleged defects in the application.

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