Many States Extending Insurance Coverage Via Section 1332 Waivers

Federal regulators recently approved New York State’s plan to expand its Essential Plan, a public health insurance program, to New Yorkers with incomes up to 250 percent of the Federal Poverty Line, which is $37,650 annual income for an individual. This will extend the plan to another 100,000 New Yorkers.

The U.S. Department of Health and Human Services and U.S. Department of Treasury recently approved New York's Section 1332 State Innovation Waiver application. Section 1332 State Innovation Waivers, part of the Affordable Care Act, allow states to pursue innovative strategies for providing residents with access to high-quality, affordable health insurance. State Innovation Waivers have been available since January 1, 2017, are approved for up to five-year periods, and can be extended.

In order for a Section 1332 waiver to be approved, the federal departments must determine that the waiver will provide coverage that is at least as comprehensive as the coverage provided without the waiver; provide coverage and cost-sharing protections against excessive out-of-pocket spending that are at least as affordable as without the waiver; provide coverage to at least a comparable number of residents as without the waiver; and not increase the federal deficit.

Since 2017, more than 20 states have submitted Section 1332 waiver applications seeking to establish reinsurance programs, eliminate employer mandates, introduce premium subsidy alternatives, or privatize their health insurance marketplaces. CMS has approved 19 waiver applications to date.

For example, Washington state’s Section 1332 waiver, effective Jan. 1, 2024 through Dec. 31, 2028, allows for all Washington residents, regardless of immigration status, to enroll in health plans through the same front door at the state Exchange, and to benefit from state subsidies that lower premium costs. Additionally, for the first time, this waiver will allow newly eligible Washington residents to enroll in a single health plan with a single deductible along with their currently eligible family members through the same plan shopping and enrollment process.

The waiver will also reduce the need for individuals and families to rely on less affordable or less comprehensive forms of coverage, or from remaining uninsured and relying on costly emergency room services and charity care, thereby reducing uncompensated care and improving the overall state economy.

The New York waiver was approved for five years, from 2024 through 2028. This expansion of coverage is estimated to save New Yorkers an average of $4,700 per year, compared to what they would have spent on health coverage through Qualified Health Plans. 

“Since introduced by the Marketplace in November 2015, the Essential Plan has served as a critical haven for New Yorkers unable to qualify for Medicaid but still struggling to stay afloat with the cost of health insurance,” said Danielle Holahan, executive director of New York State of Health, the state’s health plan marketplace, in a statement. “We are excited to build upon the success of this program to extend affordable, comprehensive health insurance coverage with no monthly premium to more low-income New Yorkers, including the Deferred Action for Childhood Arrival (DACA) population.”  

The Essential Plan already covers over 1 million low-income New Yorkers, providing comprehensive benefits with $0 monthly premiums, no deductible, and low-cost sharing. It also includes free preventive care, adult vision, and dental care without cost-sharing.  

The Section 1332 waiver also complements New York’s recently approved 1115 Medicaid Demonstration waiver in terms of addressing social determinants of health through grants in the following focus areas:    
• Food insecurity, including medically tailored meals, food pharmacies, and personalized coaching;
• Preparing for climate change by providing enrollees with persistent asthma with an air conditioner to protect their health, reduce the number of Emergency Department visits, and help communities prepare for extreme weather;
• Knowledge sharing, including provider training on mental health services and social determinants of health;
• The waiver seeks to improve behavioral health for Essential Plan enrollees through grants to insurers support improved access to behavioral health services, including mobile crisis units, crisis diversion centers, and crisis respite centers.