The Impact of Section 1332 Waivers in the ACA Individual Market Risk Pool

• In Event: Federalism in Practice: State Policy Discretion and Coverage and Market Outcomes in the ACA

Abstract

Background: The Affordable Care Act empowers states to file Section 1332 waivers to modify the state’s individual health insurance markets.  These waivers must meet legislative guardrails on cost, access, and enrollment.  Sixteen states have reinsurance programs which inject state funds into the claims payment process which is intended to lower gross premiums.  Prior research has shown that these waivers increase the minimum cost of coverage for some on-exchange enrollees.    
Objective: Causally evaluate the impact of Section 1332 reinsurance waivers on metal level by market type (on and off-exchange) enrollment and risk scores in the ACA Individual health insurance markets.
Data: The primary data is the 2017-2024 Centers for Medicare and Medicaid Appendix G risk adjustment summaries containing state-year-metal level-market type enrollment and risk score.  We supplemented this data with state-year binary indicators for Medicaid Expansion, Section 1332 reinsurance waivers and State Based Marketplace operations from the Kaiser Family Foundation.
Methods: We conducted with entropy balancing staggered difference in differences analysis for the primary outcomes for states with complete outcome data which adopted reinsurance waivers between January 1, 2018 and January 1, 2024. The comparison group are the states with complete outcome data which never adopted Section 1332 reinsurance waivers during the study period. We conducted a placebo tests on all outcomes using the small group markets  for all outcomes.
Results: Preliminary results show a significant increase in Gold-On Exchange PLRS relative to Gold Off-Exchange PLRS and a smaller but still significant increase in Bronze On-Exchange PLRS relative to Bronze Off-Exchange PLRS.  Insignificant changes in relative PLRS were observed for Silver plans.    
Policy Implications: The small off-exchange Bronze and Gold risk pools are improving morbidity while the far larger on-Exchange risk pools are becoming markedly more morbid.    States, in 2024, spent approximately $5 billion dollars in state revenue subsidize a small portion of the ACA individual market.  Prior research has found substantial enrollment losses among the subsidized population.  Understanding the distributional consequences of reinsurance will enable for finer monitoring of the mandatory guardrails as well as improve program design.

Author

• Daniel Ludwinski, Emory University
  Presenting Author