Two states looking for approval to customize their health insurance systems under the Affordable Care Act reversed course after the Trump administration said their applications couldn't be approved in time for next year.
Both states sought to use some of the money that would have gone toward subsidies for consumers to instead create reinsurance programs that would protect insurers from major losses. Reinsurance often lowers premiums.
Iowa Gov. Kim Reynolds, a Republican, blamed the rules of the Affordable Care Act for the failure of her state's proposal. "Obamacare gives states very little flexibility for innovation," Reynolds said at a news conference.
She gave credit to CMS Administrator Seema Verma for trying to get the waiver approved. "Unfortunately Obamacare is an unworkable law," Reynolds said. She then urged Congress to pass a law to repeal the Affordable Care Act.
But there's another way of looking at it. CMS took a "hard line" on its interpretation of the law, said Larry Levitt, a senior vice president at the Kaiser Family Foundation. In a letter to Iowa, the agency said the state's proposal doesn't meet the law's requirements that the alternative plan not add to the federal deficit.
"The question is how sharp the pencils have to be that reviewers in HHS are using" Levitt said. "They could be a little looser in their analysis, but would risk a negative report down the road."
On the same day that Iowa withdrew its waiver, CMS told Massachusetts that the agency couldn't approve the state's waiver in time for open enrollment, which begins Nov. 1. The Affordable Care Act requires all proposals to allow 90 days for public comment. CMS said Massachusetts' application came too late.
The failures of the two states' waiver applications follow a trend. Several states have seen their proposals delayed, denied or only partly approved, after administration officials actively encouraged states to apply.
Some critics say the denials are part of an administration effort to force the ACA marketplaces to fail. But Levitt says the agency is on solid legal ground in its strict interpretation of the rules.
Still , there appears to be a switch, given the administration's previous invitation to states to seek permission for insurance market changes.
Former HHS Secretary Tom Price, who resigned last month, encouraged states to apply for the waivers. Just weeks after he was sworn in in February, Price wrote a letter to every governor in the country urging them to consider creating reinsurance programs and high-risk pools.
HHS "invites states to pursue approval of waiver proposals that include high-risk pool/state-operated reinsurance programs," the letter says. "The Departments will work with states to review all applications within the timeframe provided ... and do our best to work with states to review their applications on an expedited basis."
Sen. Lamar Alexander, R-Tenn., has sought to relax the waiver process. A bipartisan bill he co-authored with Sen. Patty Murray, D-Wash., would cut the wait time for waivers to be approved and allow states to go ahead with just the approval of the governor rather than a vote from the legislature. The bill would also make it easier for states to get copycat waivers once a program has been approved elsewhere.
Alexander said his bill would fix the problems that doomed the Massachusetts proposal. "Under the Alexander-Murray bill, states can get waivers approved in 45 days if the situation requires urgent action," he said in a statement. "So Massachusetts could have had its waiver approved by now to help reduce chaos when open enrollment begins next week. This is further evidence that the Affordable Care Act needs changes and that states need our bill to get flexibility from the law."
The Alexander-Murray bill, which was co-sponsored by 24 senators, has yet to be scheduled for a vote, and President Trump has wavered on whether he supports the plan.