Trump's call to deny Iowa waiver request give states uncertain outlook

President Donald Trump recently urged CMS Administrator Seema Verma to deny Iowa's 1332 waiver plan, sending mixed signals to states trying to stabilize their Affordable Care Act insurance exchanges.

According to a Washington Post report, Trump personally reached out to Verma in late August and asked her to reject the state's pending waiver. The CMS is still reviewing the 1332 waiver, but health policy experts say the intervention by the president only adds to states' concerns over the future viability of their marketplaces.

"It's definitely sending mixed signals to states, and suggests that it's unclear what the priorities are (in the administration), and I think it makes it hard for states to know how to proceed," said Jennifer Tolbert, director of state health reform at the Kaiser Family Foundation.

The Iowa waiver is one of two 1332 waivers currently under CMS consideration. Iowa asked the agency to approve its waiver on an emergency basis because it runs the risk of only one insurer, Minnesota-based Medica, selling ACA plans in 2018. Wellmark Blue Cross and Blue Shield said it would reverse its decision to exit Iowa's exchange market if the waiver is approved.

The deadline for approval of the waiver is Oct. 19. The CMS is also reviewing a 1332 waiver from Oregon.

John Gorman, a former CMS official who is now a D.C. consultant for health plans, said the attempt by Trump to stop a waiver in a red state tells Republican governors "don't bother, we are out to sabotage Obamacare at every opportunity we get."

ACA advocates say the HHS is making efforts to destabilize the law. The CMS announced in late August that the ACA's marketing and outreach budget for the 2018 open-enrollment period would be cut by 90%. The HealthCare.gov site will also be taken offline for 12 hours on almost every Sunday during enrollment.

But considering the encouragement by Verma and former HHS Secretary Tom Price for states to take advantage of waivers, "it is likely that the concept of state flexibility will ultimately win," said Dan Mendelson, the president of the consulting firm Avalere Health.

The Trump administration has approved several waivers, but the majority have focused on Medicaid reform. Two 1332 waivers in Alaska and Minnesota have been approved, although the latter's waiver was deeply modified. Oklahoma was forced to withdraw its waiver request after the CMS failed to approve it by its September deadline.

"There seems to be an openness to granting broad state flexibility on the Medicaid side, so it seems somewhat curious that the same approach isn't adopted when it comes to the 1332 waivers," Tolbert said.

Mendelson said states will closely watch how the CMS ultimately acts on the Iowa waiver, and it will be a signal to how they should tailor any waivers in 2019. State waivers will probably "keep coming," he said. "The states are going to learn from what other states are doing."

Gorman also said that states will likely continue to submit waivers because "the alternative isn't particularly attractive."

Iowa's waiver sparked controversy for its proposed reforms that would dramatically change its marketplace.

Under the request, residents would receive premium subsidies based on broad age and income categories, without using the Affordable Care Act's calculation to cap premium costs at a certain percentage of a person's income. People earning more than 400% of the federal poverty level would also be eligible for premium subsidies while people with incomes from 138% to 250% of poverty would no longer receive cost-sharing subsidies to reduce their deductible and coinsurance payments.

Some health policy experts said eliminating cost-sharing reductions would make healthcare unaffordable for lower-income people.