a .
. THE SECRETARY OF HEALTH AND HUMAN SERVICES
. 
WASHINGTON, o.c. 211201
a
99?" MAR 3 2017

Dear Governor:

The Administration?s t0p priorities include improving patients? access to and affordability of
care, slowing the rate of premium growth to improve the risk pool, bringing stability to the
individual and small group health insurance markets, and increasing consumer choice. To
achieve these ends, we are seeking to empower states with new opportunities that will strengthen
their health insurance markets. In accordance with President Donald J. Trump?s January 20,
2017, Executive OrderI directing agencies to alleviate the burdens of the Affordable Care Act
(ACA), we are seeking to provide more ?exibility and opportunities for innovation on the state
level.

Under Section 1332 of the ACA, states can apply for State Innovation Waivers and pursue
innovative strategies to adapt many of the law?s requirements to suit the state?s speci?c needs.l
To receive approval, the state must demonstrate that a pr0posed waiver will provide access to
quality health care that is at least as comprehensive and affordable as would be provided without
the waiver, will provide coverage to at least a comparable number of residents of the state as
would be provided coverage without a waiver, and will not increase the federal de?cit. Before
submitting its Section 1332 waiver application the state must also provide a public notice and
comment period, including public hearings, suf?cient to ensure a meaning?ll level of public
input, and enact a law providing for its implementation of the waiver. Under a Section 1332
waiver, a state may receive pass-through ?lnding associated with the resulting reductions in
federal spending on Marketplace ?nancial assistance consistent with the statute.

State Innovation Waivers that implement high-risk poolfstate?operated reinsurance programs
may be an opportunity for states to lower premiums for consumers, improve market stability, and
increase consumer choice. For example, in response to initial rate information for plan year
2017 in Alaska indicating that premiums were projected to increase by 42% in the individual
market, Alaska implemented a state-Operated reinsurance program for 2017 that mitigated the
projected rate increase signi?cantly. Based on that success, Alaska has applied for a Section
1332 waiver, part of which would implement a high-risk poolistate-Operated reinsurance
program, the Alaska Reinsurance Program, for 2018 and future years. We are reviewing the

 

     

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Provisions that may be waived include the following. Part I of Subtitle of Title I of the Affordable Care Act (relating to
establishing quali?ed health plans Part of Subtitle ofTitIe of the ACA (relating to consumer choices and
insurance competition through health insurance marketplaces), Sections 363 of the lntemal Revenue Code and 1402 of the AC A
(relating to premium tax credits and cost-sharing reductions for plans offered within the marketplaces); Section 4980H of the
Internal Revenue Code (relating to employer shared responsibility); and Section 5000A of the lntemal Revenue Code (relating to
individual shared responsibility).

application and will work with the State on any updates or adjustments necessary for receipt of
pass?through funding consistent with the statute.

We welcome the opportunity to work with states on Section 1332 State Innovation Waivers, and
in particular, invite states to pursue approval of waiver proposals that include high-risk
pool/state-operated reinsurance programs. If a state?s plan under its waiver proposal is approved,
a state may be able to receive pass-through funding to help offset a portion of the costs for the
high-risk pool/state?operated reinsurance program. The amount of funding available will depend
on state-Speci?c circumstances.

We encourage states interested in applying for Section 1332 waivers to reach out to the
Departments for assistance in formulating an approach that meets the requirements of
Section 1332. As a reminder, consistent with the statute, states must enact or revise state laws to
apply for and implement Section 1332 waivers.

The Departments will work with states to review all applications within the timeframe provided
under Section 1332?s implementing regulations and do our best to work with states to review
their applications on an expedited basis. In the coming weeks, we will be providing a checklist
with further information intended to assist states in moving forward with waiver applications.
If your team would like to discuss Section 1332 waivers in more detail, please email
You may also ?nd general information about State
Innovation Waivers at the CMS website.3 We look forward to working with you.

Yours truly,

DAMS. ..

Thomas E. Price, M.D.

cc: Steven Mnuchin, Department of the Treasury

 

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