Georgia's 1332 Waiver Violates the ACA and Cannot Lawfully Be

Georgia’s 1332 Waiver

Violates the ACA and

Cannot Lawfully Be

Approved

______________________________________________________

Christen Linke Young

Jason Levitis

This report is available online at: https://www.brookings.edu/research/georgias-1332-waiver-violates-the-aca-and-cannot-be-lawfully-approved/

USC-Brookings Schaeffer Initiative for Health Policy

January 2020

EDITOR ’S NOTE

This white paper is part of the USC-Brookings Schaeffer Initiative for Health Policy, which is a

partnership between the Economic Studies Program at Brookings and the USC Schaeffer Center for

Health Policy & Economics. The Initiative aims to inform the national health care debate with rigorous,

evidence-based analysis leading to practical recommendations using the collaborative strengths of

USC and Brookings.

 
 
 
Contents 
Introduction .............................................................................................................................................. 1 
What Georgia’s waiver does ...................................................................................................................... 1 
The legal vulnerabilities of the waiver ...................................................................................................... 2 
Georgia’s waiver violates the statutory affordability guardrail ............................................................... 3 
Georgia’s  waiver  would  also  fail  the  affordability  guardrail  when  considering  the  coverage  “made 
available” ................................................................................................................................................... 4 
Gold plans are unlikely to remain available ......................................................................................... 4 
The existence of a cap means affordable coverage is not available to all eligible residents ............... 5 
The actuarial analysis includes clear objective errors that hide a deficit of around $200 million per 
year ............................................................................................................................................................ 6 
The state fails to account for about $150 million per year in federal employer mandate penalty lost 
due to waiving the premium tax credit. ................................................................................................ 6 
The state wrongly assumes that HealthCare.gov can fully defray $100 million per year in lost user 
fee revenue ............................................................................................................................................ 6 
The state ignores the costs of eliminating subsidy reconciliation, which are likely tens of millions of 
dollars per year ...................................................................................................................................... 7 
Correcting these modeling errors would reveal a $200 million annual shortfall ............................... 7 
Georgia’s waiver analysis makes unexplained and implausible assumptions ........................................ 7 
Georgia’s coverage assumptions are not supported ............................................................................. 7 
Georgia’s assumptions about unsubsidized enrollment are also unfounded ...................................... 8 
Georgia’s claims about premiums changes are problematic ............................................................... 9 
More accurate assumptions about pass-through, enrollment, and premiums could result in the waiver 
failing under the coverage guardrail ........................................................................................................ 9 
Clear guardrail violations ....................................................................................................................... 10 
Procedural failures .................................................................................................................................. 10 
Shortcoming of the economic and actuarial analysis ......................................................................... 10 
No meaningful state or federal comment period ................................................................................ 11 
Waiver is not complete ........................................................................................................................ 12 
No authorizing state legislation .......................................................................................................... 12 
Copper plans may require waiver of provisions that 1332 cannot reach .............................................. 13 
An approval of the waiver is not likely to hold up in federal court ....................................................... 14 
 

Introduction

In late December, Georgia submitted a proposal to the federal government to reform the state’s health

insurance market under a Section 1332 waiver.

The waiver proposes, among other things, replacing

the premium tax credit under the ACA with a new state-operated financial assistance program that can

be used to purchase coverage with far higher cost-sharing than would otherwise be allowed under the

ACA. Further, the state would cap the total amount of financial assistance it provides and would put

potential consumers on a “waitlist” once the cap is reached.

A waiver structured in this way does not meet the requirements laid out in Section 1332 that waivers

must provide coverage that is just as affordable and comprehensive to just as many people as would

have it absent the waiver, all without increasing the federal deficit. And the analysis accompanying

Georgia’s waiver includes errors both obvious and subtle that mean that the waiver’s actual effects are

different than the state claims. This makes it impossible for the numbers to add up or for the analysis

to satisfy the requirements of Section 1332. The waiver also fails other procedural tests. HHS and

Treasury (the Departments) cannot legally approve this waiver, and if they attempted to do so, a

plaintiff suing to overturn it would be expected to prevail. Other states considering following Georgia’s

lead should be aware of these flaws before starting down this legally fraught path.

What Georgia’s waiver does

Georgia’s 1332 proposal contains two “phases.” The first phase, taking effect for plan year 2021, would

implement a reinsurance program. The second phase would begin in 2022 and would overhaul the

state’s individual health insurance market, including the Health Insurance Marketplace, as we all as

the financial assistance available to consumers buying individual market coverage. This analysis

focuses primarily on the second phase of the waiver; the reinsurance program of the first phase is

similar to other states’ 1332 waivers and poses no serious concerns, while the second phase proposes

a novel set of policies that is not only unlawful, but also would undermine the ACA.

In the problematic second phase of the waiver, Georgia would implement four related policies:

• First, the waiver would eliminate the Health Insurance Marketplace and instead require

consumers to enroll in coverage through private websites or call centers, operated by insurance

companies or private vendors called web-brokers. The state would offer an eligibility tool that

these private entities would use to verify consumer eligibility, but no public-facing,

government-operated enrollment mechanism would be available. Vendors would be permitted

to promote non-standard health products (like short-term plans and fixed indemnity

coverage) alongside traditional health plans.

• Second, the state would allow the sale of two new types of plan that do not comply with all ACA

requirements, which the state refers to as “non-QHPs” (or non-Qualified Health Plans). It

would allow consumers to purchase “copper plans” with an actuarial value of 50%, which

would have higher cost-sharing than would otherwise be allowed under the ACA. A simple plan

Georgia Medicaid, Patients First Act, https://medicaid.georgia.gov/patientsfirst.

The reinsurance phase of the waiver is expected to decrease premiums and slightly increase enrollment, consistent with

other states’ experiences. The Departments generally evaluate waivers as a package, and one could imagine an analysis under

which a reinsurance policy would generate “gains” against the 1332 guardrails that the state could “spend” in pursuing

policies that would otherwise cause “losses” under the guardrails. However, in this case the reinsurance program is not

expected to meaningfully ameliorate the legal obstacles to approval described below. Georgia projects that the reinsurance

waiver will increase enrollment by about 1,500 people – not enough to overcome the potential coverage losses from the

second phase. And the waiver’s affordability problems focus on cost-sharing, while the reinsurance program changes only

premiums. One could also argue that, since the state proposes that its reinsurance program be both approved and

implemented separately from the individual market changes, the two policies should be evaluated separately, but such a

claim is not necessary to show that the waiver cannot be approved.

design at this actuarial value would require a deductible and out-of-pocket limit equal to

$13,500 per person – more than 60% greater than the ACA allows. At the same time, the waiver

would eliminate the requirement that QHP issuers offer silver and gold plans.

The state also contemplates allowing “disease management plans” that would be designed to

meet the needs of people with chronic conditions. Of course, carriers can offer such plans

under current law. The state indicates that under the waiver, disease management plans will

have “flexibility” in meeting the essential health benefits requirements of the ACA. The state

provides little detail on what this flexibility might entail, other than noting that the plans will

still be required to cover all ten essential health benefits. The state suggests it might seek

approval to offer other types of non-QHP plans in the future.

• Third, the waiver would eliminate the ACA’s premium tax credit (PTC) and cost-sharing

reductions (CSR) for people who buy coverage in the individual market and replace them with

a state-operated financial assistance program. The state would receive the federal money that

would have been spent on these programs (net of any federal cost of the waiver) as a “pass-

through” payment and supplement it with a small amount of additional state funding. A

consumer eligible for assistance could use their state premium subsidy to buy either a

traditional bronze, silver, gold, or platinum plan, or a non-QHP copper plan or disease

management plan.

The state financial assistance would be calculated the same way that financial assistance is

calculated under current law. That is, PTC would be based on the second-lowest cost silver

plan available to the consumer, and the consumer’s contribution would be set on a sliding scale

based on income. The waiver proposal indicates that the state might change its methodology

for calculating financial assistance in the future but would seek additional federal approval to

do so.

• Finally, the state proposes a cap on the financial assistance provided. The state would make

only a limited and specified amount of financial assistance available; once it is on track to

spend that full amount, consumers would be placed on a waitlist. Consumers on the waitlist

would not be able to enroll in coverage with financial assistance and would be forced to either

pay the full premium or remain uninsured. (For context, in Georgia in 2019, 88% of

Marketplace enrollees received financial assistance, and advance PTC payments covered an

average of 88% of the premium among those receiving them, so the overwhelming majority of

affected consumers would be expected to remain uninsured.

)

The legal vulnerabilities of the waiver

Georgia’s proposed 1332 waiver is plagued by legal problems large and small. Even before considering

the particularities of Georgia’s submission, a waiver structured in the way the state proposes will fail

to satisfy the statutory requirement that it must provide coverage that is as affordable as coverage

under the ACA. Further, the specific proposal submitted by the state is likely to violate the requirement

that a waiver provide coverage to as many people as would have it absent the waiver, and suffers from

additional weakness.

Specifically:

• By facilitating the purchase of copper plans with much higher cost-sharing than ACA-

compliant plans, the waiver violates the statutory instruction to “provide coverage and cost

Centers for Medicare & Medicaid Services, 2019 Marketplace Open Enrollment Period Public Use Files,

https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Marketplace-

Products/2019_Open_Enrollment.

sharing protections against excessive out-of-pocket spending that are at least as affordable” as

the ACA.

• The waiver also fails under the (unlawful) interpretation of 1332 advanced by the Departments

that a waiver should be judged based on the coverage that is “made available” to people. This

is because, among other things, the waiver’s budget cap means that affordable coverage would

in fact not be made available to otherwise-eligible consumers.

• Georgia’s analysis of its own policy proposal includes several objective errors that make its

funding insufficient – even under its own modeling assumptions – by about $200 million per

year.

• The analysis also makes a variety of unrealistic assumptions about consumer behavior, failing

to consider a wide variety of reasons that premiums would rise or coverage drop under the

waiver. More realistic assumptions suggest that the waiver would fail to satisfy the coverage

guardrail or the state’s budget cap would be hit, or both.

• The submission fails to meet basic procedural requirements for 1332 waivers, including the

requirement to provide an adequate actuarial and economic analysis and a meaningful state

comment period pre-submission.

• The conceptual core of the waiver – allowing plans to impose much higher cost-sharing than

otherwise permitted under the ACA – arguably requires waiving provisions of law that the

Departments are not authorized to waive under Section 1332.

Each of these issues is considered in turn in the analysis that follows.

Georgia’s waiver violates the statutory affordability guardrail

Under Georgia’s waiver, consumers would newly be permitted to use financial assistance to buy copper

plans with much higher cost-sharing than is allowed under the ACA. These copper plans would have

an actuarial value of 50% (as opposed to the 60% AV required under the ACA), and out-of-pocket

maximums of $13,500 per person or more

(as opposed to the $8,150 cap under the ACA). This change

will clearly cause the waiver to run afoul of Section 1332’s affordability guardrail.

We can begin with the statutory language:

The Secretary [of HHS or Treasury] may grant a request for a waiver… only if the Secretary

determines that the State plan will provide coverage and cost sharing protections against

excessive out-of-pocket spending that are at least as affordable as the provisions of [Title I of

the ACA] would provide.

The waiver fails this test. A central feature of the waiver would provide coverage with cost-sharing that

is less affordable than the plans allowed under the ACA. Enrollment in less affordable plans is not a

second- or third-order impact of the state’s waiver plan that requires sophisticated analysis and

modeling to understand; it is the intent of Georgia’s plan. The Departments cannot lawfully conclude

a waiver intended to provide coverage less affordable than the ACA will provide coverage “at least as

affordable” as the ACA.

Using CMS’s current actuarial value calculator, modified to allow inputs that are otherwise prohibited because they violate

the ACA provisions the state seeks to waive, a plan with a deductible and out-of-pocket limit of $13,500 has an AV of 50%.

Plans with lower deductibles can also achieve a 50% AV, but only by increasing the out-of-pocket limit; an $11,000

deductible coupled with 20% coinsurance requires a $16,000 out-of-pocket limit to achieve a 50% AV. That is, roughly

$13,500 is the smallest possible out-of-pocket maximum that can achieve an AV of about 50%.

The state may assert that because these low AV copper plans have premiums that are lower than

premiums for other plans they still should be considered affordable under the statute, but the language

of Section 1332 clearly forecloses this claim. The statute defines affordability not simply as a general

balancing of the costs of coverage, but to require a determination of whether the waiver’s coverage will

provide “protections against excessive out-of-pocket spending” that are equivalent to the ACA. But it

is exactly that protection that the state’s waiver seeks to erode by allowing consumers to enroll in plans

that expose them to out-of-pocket costs at least $5,000 greater than otherwise permitted.

The Departments have previously considered whether a state could use a 1332 waiver to offer copper

plans, and concluded that the plain language of the statute precludes that policy, when they issued

(now-revoked) 2015 guidance on the 1332 guardrails.

As the Departments said then, in a

straightforward interpretation of the statute, “Waivers that reduce the number of people with

insurance coverage that provides both an actuarial value equal to or greater than 60 percent and an

out-of-pocket maximum that complies with Section 1302(c)(1) of the ACA, would fail” the affordability

requirement. A waiver that makes copper plans available with financial assistance must, under any

plausible set of assumptions, decrease the number of people with coverage that meets this standard.

Some people who would otherwise buy higher AV plans will elect to buy copper plans, and there is no

plausible pathway by which the waiver would induce an equal or greater number of people who would

otherwise be uninsured to buy ACA-compliant plans. Indeed, the state’s own analysis indicates that

33% of existing subsidized consumers in bronze plans would switch to copper plans.

Georgia’s waiver would also fail the affordability guardrail when

considering the coverage “made available”

The state may hope to satisfy the affordability guardrail by relying on unlawful 1332 guidance released

in 2018.

In that guidance, the Departments purport to interpret the affordability guardrail to require

that the affordability analysis will “focus on the nature of coverage that is made available to state

residents (access to coverage), rather than on the coverage that residents actually purchase.” That is,

the state may claim that because the waiver would allow consumers to buy bronze or other higher AV

coverage if they choose, it satisfies this “made available” test because consumers have “access” to more

affordable plans. The 2018 guidance is unlawful on both procedural and substantive grounds,

but

even under this weaker standard the state’s waiver would necessarily fail the affordability guardrail,

for two distinct reasons.

Gold plans are unlikely to remain available

First, Georgia’s proposal waives the requirement for insurers to offer plans in the gold and silver tiers.

The state’s analysis seems to assume that issuers would continue to offer higher AV plans roughly as

they do today despite this change. But the evidence suggests they would not. Under the ACA, issuers

in the Marketplace are permitted to offer bronze, silver, gold, and platinum plans, and they are

Centers for Medicare & Medicaid Services, HHS; Department of the Treasury, Waivers for State Innovation 80 Fed. Reg

78131 (December 16, 2015), https://www.federalregister.gov/documents/2015/12/16/2015-31563/waivers-for-state-

innovation.

Centers for Medicare & Medicaid Services, HHS; Department of the Treasury, State Relief and Empowerment Waivers, 80

Fed. Reg. 53575 (October 24, 2018), https://www.federalregister.gov/documents/2018/10/24/2018-23182/state-relief-and-

empowerment-waivers.

For a discussion of the myriad ways in which the 2018 guidance violates the statute, see Joel McElvain, The

Administration’s Recent Guidance on State Innovation Waivers under the Affordable Care Act Likely Violates the Act’s

Statutory Guardrails, YALE J. REG., December 11, 2018, https://www.yalejreg.com/nc/the-administrations-recent-

guidance-on-state-innovation-waivers-under-the-affordable-care-act-likely-violates-the-acts-statutory-guardrails-by-joel-

mcelvain. For a discussion of why the guidance is procedurally invalid; see Christen Linke Young, The Trump

Administration Side-Stepped Rulemaking Processes on the ACA’s State Innovation Waivers, THE BROOKINGS INSTITUTION,

November 28, 2018, https://www.brookings.edu/blog/usc-brookings-schaeffer-on-health-policy/2018/11/28/the-trump-

administration-side-stepped-rulemaking-processes-on-the-acas-state-innovation-waivers-and-it-could-make-their-new-

section-1332-guidance-invalid.

required to offer silver and gold plans.

Notably, today platinum plans have disappeared for many

consumers – in 2020 80% of Georgia counties (and 95% of all counties served by HealthCare.gov)

have no platinum plans available to consumers.

Further, issuers have periodically sought relief from

the requirement to offer gold plans, making clear that many issuers do not want to offer high AV plans

and will only do so if required.

Georgia’s proposal would waive the requirement that issuers offer

silver and gold plans, and nothing else in the waiver offers any inducement for issuers to offer gold

plans. Under these circumstances, gold plans would be expected to largely disappear from the market,

just as platinum plans have under current law, so consumers would no longer have the higher cost-

sharing protection of gold plans “made available” to them.

Indeed, the only possible reason to

approve a waiver of the requirement to offer silver and gold plans is to make them less available, so

this cannot satisfy the guardrail.

The existence of a cap means affordable coverage is not available to all eligible residents

The second problem is more fundamental to the structure of the waiver. Recall that Georgia’s waiver

converts the ACA’s entitlement to financial assistance for all eligible consumers into a capped state-

run program under which the state will only provide financial assistance up to a budgetary cap.

According to the state, the cap (which includes all federal pass-through funds and a small amount of

additional state funding) is sufficient to provide financial assistance to about 359,000 consumers –

25,570 more than the 333,500 who are projected to receive it under current law – assuming

benchmark premiums decrease by 1.9%.

After hitting the cap, the state will place consumers on a

waitlist – with no additional financial assistance provided. The state says it does not expect to hit this

cap, because it expects fewer additional subsidized people to enroll than could fit below the cap.

But the very existence of this cap violates the (unlawful) “made available” test articulated by the federal

government in its 2018 guidance. Under current law, affordable coverage is “made available” to all

eligible consumers, including the roughly 330,000 people actually enrolled in coverage with financial

assistance and the over 700,000 residents who the application says are eligible for financial assistance

but have not enrolled.

But under a capped plan, affordable coverage is only “made available” to the

number who can fit below the cap, which is roughly equivalent to the much smaller number of people

who are actually enrolled today. That is, under the state’s analysis, current-law financial assistance

makes affordable coverage available to over 1 million people, while Georgia’s waiver makes affordable

coverage available to only 359,000.

See ACA § 1301(a)(1)(C)(ii).

The Center for Consumer Information & Insurance Oversight, Qualified Health Plan Choice and Premiums in

HealthCare.gov States, https://www.cms.gov/CCIIO/Resources/Data-Resources/QHP-Choice-Premiums.

See, e.g., Blue Cross Blue Shield Association, HHS Notice of Benefit and Payment Parameters for 2018 – Proposed Rule as

Issued in the Federal Register on September 6, 2016, https://www.regulations.gov/document?D=CMS-2016-0148-0575;

Molina Healthcare, Inc., Comment on CMS 9934-P, Proposed Rule: Patient Protection and Affordable Care Act: Benefit and

Payment Parameters for 2018, https://www.regulations.gov/document?D=CMS-2016-0148-0643.

The absence of gold plans may also create an affordability problem under the statutory language, without considering the

unlawful “made available” language. Some consumers may also see reduced choice among silver or even bronze plans, but

because the state-law equivalent of CSRs are available only in silver plans, it seems likely that issuers would continue to offer

some silver plans.

See Actuarial Analysis Table 2.7.

Specifically, the application twice notes that Georgia has 1.4 million uninsured residents, of whom more than 50% are

eligible for financial assistance. See pages 1 and 18.

Kaiser Family Foundation figures based on the 2017 American Community Survey put the current number of uninsured

Georgia residents who are eligible for Marketplace financial assistance lower, at 435,000 (instead of over 700,000). Even

using the lower figure, less than half of those eligible for financial assistance under current policy could receive it under the

waiver. See Kaiser Family Foundation, Distribution of Eligibility for ACA Health Coverage Among those Remaining

Uninsured as of 2017, https://www.kff.org/health-reform/state-indicator/distribution-of-eligibility-for-aca-coverage-

among-the-remaining-uninsured/.

And, indeed, the 2018 guidance is explicit that the guardrail analysis under these tests should compare

the “number” of people to whom affordable coverage is made available under the waiver and under

current law:

The Departments will consider the affordability requirement to be met in a state plan that will

provide consumers access to coverage options that are at least as affordable and

comprehensive as the coverage options provided without the waiver, to at least a comparable

number of people as would have had access to such coverage absent the waiver.

A capped waiver, then, cannot be said to provide access to affordable coverage to the same number of

people who have access under current law – even if the state claims not to expect the cap to be

triggered. That said, the following sections demonstrate that there is a substantial likelihood that the

state will, in fact, hit the cap, meaning that there will be hundreds of thousands of people for whom

affordable coverage is not made available.

The actuarial analysis includes clear objective errors that hide a deficit of

around $200 million per year

The waiver as currently designed does not include sufficient funds to be implemented as claimed or to

satisfy the guardrails. The state simply has less money committed than it projects relative to its costs,

which makes it impossible to satisfy the coverage guardrail under the cap. Specifically, there are three

reasons that federal pass-through funding would be lower and state costs higher than the state

projects.

The state fails to account for about $150 million per year in federal employer mandate penalty

lost due to waiving the premium tax credit.

The state entirely neglects the impact to the federal government of forgone employer mandate

payments; those forgone amounts affect deficit neutrality and therefore would be subtracted from the

pass-through amounts. Under the employer mandate rules, employers may owe a penalty only when

their employees receive the premium tax credit (PTC). Because Georgia consumers will receive state

assistance in place of the federal PTC, employers will generally not owe penalties with respect to

employees who are Georgia residents. This will reduce federal revenue by about $150 million in the

first year of the waiver alone

– about as much the Georgia’s entire proposed contribution to the new

subsidies.

The state wrongly assumes that HealthCare.gov can fully defray $100 million per year in lost

user fee revenue

In its calculations of deficit neutrality and pass-through funding, the state assumes the federal

government will achieve program savings equal to 100% of the user fee revenue that it will no longer

receive once Georgia withdraws from HealthCare.gov: over $100 million per year. Substantial program

This figure is derived by allocating the U.S. Treasury Department’s projection of employer mandate payments for fiscal

year 2023 by each state’s share of 2019 APTC recipients. See Office of Management and Budget, Supplemental Materials:

Receipts XLS, https://www.whitehouse.gov/omb/supplemental-materials/; and Centers for Medicare & Medicaid Services,

2019 Marketplace Open Enrollment Period Public Use Files, https://www.cms.gov/Research-Statistics-Data-and-

Systems/Statistics-Trends-and-Reports/Marketplace-Products/2019_Open_Enrollment.

The Trump Administration has confirmed that states seeking to waive the PTC through a Section 1332 waiver must account

for lost employer mandate revenue. See [CMS Letter to Iowa Commissioner Doug Ommen, Oct. 19, 2017.] (“[B]ecause

individuals in Iowa will not receive premium tax credits, employers of Iowa residents will not be liable for employer shared

responsibility payments with respect to their Iowa employees under IRC section 4980H…To prevent the waiver from

increasing the Federal deficit, the Departments would provide passthrough funding equal to the estimated amount of premium

tax credits that would have been paid on behalf of Iowa residents had the State not received such a waiver, less the estimated

reduction in…employer shared responsibility payments [and other adjustments].”)

savings are likely given reduced marginal costs for customer service and processing of enrollment-

related documents. But operating HealthCare.gov also comes with substantial fixed costs to maintain

the website, support extensive IT systems, and develop necessary new functionality. The relative

shares of fixed versus marginal costs are not known, but even a relatively small fixed share could

reduce pass-through funding by additional tens of millions of dollars per year.

The state ignores the costs of eliminating subsidy reconciliation, which are likely tens of millions

of dollars per year

The structure of the state subsidy would likely increase the cost of covering each enrollee and therefore

make it harder to stay under the cap. The application does not address whether state financial

assistance will be “reconciled” at the end of the year, as the federal PTC is, but the complexity of

standing up a reconciled credit and the lack of funding designated to do so suggest that Georgia’s

subsidy probably would not be reconciled. If instead Georgia’s subsidies are based solely on income

projected with the help of available data, the state is likely to spend more per enrollee than the federal

government would have spent on PTC due to the failure to recoup excess advance payments. For

example, IRS data show that for tax year 2017, Georgia taxpayers received about $58 million in

additional PTC through reconciliation, while those who received excess APTC paid back about $109

million – a net recovery through reconciliation of about $50 million.

The application suggests Georgia will attempt to use more up-to-date information to improve the

accuracy of upfront eligibility determinations. But even with substantial improvement, eliminating

reconciliation could still cost in the tens of millions of dollars per year.

Correcting these modeling errors would reveal a $200 million annual shortfall

Taken together, these errors indicate a shortfall of about $200 million in plan year 2022 alone. Given

the deficit neutrality constraint, that means a $200 million reduction in subsidies in that year – a cut

of more than 8% compared to what Georgia promises. By comparison, Georgia estimates that its

waiver has a $39 million funding buffer beyond its cap.

In other words, not only will Georgia hit the

cap, it will fall $160 million short of the amount needed to meet its own coverage projections.

Georgia’s waiver analysis makes unexplained and implausible assumptions

The objective flaws described above could potentially be addressed through an infusion of additional

state dollars (though adding $200 million per year would nearly double Georgia’s total contribution

to the waiver – something there’s no indication Georgia will do). But the analysis also includes a

number of implausible or baseless assumptions that undermine the analysis even if this shortfall were

addressed.

Georgia asserts that its plan will increase coverage in 2022 by 35,000 people – with 23,000 receiving

subsidies and 12,000 unsubsidized – and also reduce premiums by 1.9%. The precision of these figures

is crucial to satisfying the coverage guardrail and avoiding the budget cap, given the tension inherent

in the waiver. But a closer look at the application indicates there these figures rely on a number of

unsupported and sometimes implausible assumptions.

Georgia’s coverage assumptions are not supported

Georgia claims that 25,000 of its 35,000 additional enrollees will be currently uninsured people who

enroll due to “increased accessed [sic] and web-broker marketing.” The other 10,000 would enroll due

IRS Statistics of Income Tax Stats -- Historic Table 2, Tax Year 2017, https://www.irs.gov/statistics/soi-tax-stats-historic-

table-2.

See Actuarial Analysis Table 5.26.

to the “availability of lower premium Copper Plans.” The application concedes that these figures are

not the product of any modeling – they are assumptions made by the state. For example, the “support”

given for the 35,000 figure is that “Roughly 35,000 people left the individual market between 2017 –

2019. Modeled the impact of 35,000 re-joining.”

Especially unsupported is the assumption of enrollment growth of 25,000 resulting from increased

access and web-broker marketing. Web-brokers and direct enrollment are already major channels for

enrollment in ACA plans; they are not a creation of this waiver. Indeed, the Georgia plan does not

provide for any new enrollment avenues that are not allowed under current law; it merely eliminates

the most established and popular one – HealthCare.gov. There is no reason to believe that eliminating

an existing channel without creating anything new will lead to increased enrollment. Similarly, there

is no reason to believe that increased marketing would occur or that it would lead to enrollment gains

of this magnitude, because under current law, brokers have an incentive to attract business.

On the contrary, there are reasons to fear lower levels of enrollment when private entities assume full

responsibility.

Removing the option to enroll via HealthCare.gov and requiring consumers to find a

new enrollment channel, along with potential administrative difficulties in enrolling in coverage in

entirely new system, would likely depress enrollment. Some states that have shifted from a state

Marketplace to a federal one or vice versa have seen lower levels of enrollment in the year of the

transition

– and the enrollment channel disruption Georgia contemplates here is far greater than the

disruption experienced in those cases. Consumers shifting to non-single risk pool coverage (e.g. short-

term plans sold by web-brokers) or consumers dropping coverage entirely if gold plans are not

available could exacerbate these impacts.

There’s also reason to fear a less-than-smooth transition to the state’s back-end enrollment tool. The

state provides essentially no information on how the administrative transition would work in

practice.

The state allocates a small amount of funding for their own administrative functions, but

offers no budgeting to suggest that these resources will be sufficient to manage the transformation.

And indeed, while some states have been able to stand up State-based Marketplaces (SBMs) fairly

quickly, that work is based on off-the-shelf technology developed over many years, while this waiver

would require an entirely new system for calculating eligibility and presenting different types of plans.

Given that the reinsurance program is estimated to increase enrollment by only about 1,500 people,

these challenges could easily lead to a net reduction in coverage under the waiver. Indeed, a reduction

in coverage seems more plausible than the state’s claim that 25,000 additional people will enroll via

systems that are available under current law.

Georgia’s assumptions about unsubsidized enrollment are also unfounded

Georgia’s claim that the waiver can increase coverage within its spending cap is predicated on a large

increase in consumers enrolling without subsidies. Specifically, of the 10,000 people projected to

newly enroll due to the availability of lower-cost copper plans, Georgia assumes 92% would be

unsubsidized and only 8% would receive subsidies. This is an extraordinary claim given that 88% of

current Marketplace enrollees receive subsidies and over half of Georgia’s uninsured are subsidy

See Actuarial Analysis Table 5.11.

Aviva Aron-Dine, Tara Straw, and Sarah Lueck, Georgia’s 1332 Waiver Proposal Puts Coverage at Risk for Tens of

Thousands, CENTER ON BUDGET AND POLICY PRIORITIES, January 23, 2020,

https://www.cbpp.org/research/health/georgias-1332-waiver-proposal-puts-coverage-at-risk-for-tens-of-thousands.

Megan Messerly, Health Insurance Exchange Extends Open Enrollment for In-Progress Applications; Signups Still

Likely to Lag Last Year’s, THE NEVADA INDEPENDENT, December 23, 2019,

https://thenevadaindependent.com/article/health-insurance-exchange-extends-open-enrollment-for-in-progress-

applications-signups-still-likely-to-lag-last-years.

Indeed, the only information that the state provides is that would use the Georgia Gateway system, a piece of technology

that has caused errors and backlogs in Medicaid processing. See Andy Miller, Enrollment Drops, Eligibility Snags, Cyber-

Errors in GA. Benefit Programs Spark Concern, WABE, https://www.wabe.org/enrollment-drops-eligibility-snags-cyber-

errors-in-ga-benefit-programs-spark-concern/.

eligible. But the application provides no reasonable explanation for this claim. It notes that “[b]ecause

this population [of 10,000 new enrollees] is likely more price sensitive, the analysis assumed the

increased enrollment reflects the makeup of the population who left between 2017 – 2019, of which

92% were unsubsidized.” But there is no reason to think the two groups will actually be similar.

Georgia’s claims about premiums changes are problematic

Georgia projects that the individual market changes in the waiver will reduce premiums by 1.9%. While

the state concedes that copper plans will create adverse selection that will increase benchmark

premiums by a small amount, it projects that other factors will eclipse this small increase and lower

premiums overall. There are several omissions in their consideration of these issues.

First, the premium calculation is closely tied to the assumed enrollment figures. Georgia notes that the

premium change “is primarily driven by an improvement in the overall market risk score due to new

members entering the market whose health status (risk scores) are better than the current.”

Given

that the figures for new members entering the market are implausible for the reasons discussed above,

there is reason to doubt these premium impacts will occur.

Second, there is reason to believe that the enrollment system will contribute to adverse selection in

ways Georgia does not seem to contemplate. To the extent the waiver anticipates allowing web-brokers

to do anything differently than they do today, it is to allow web-brokers to sell plans that are not a part

of the single risk pool (like short-term limited duration and fixed indemnity plans) alongside other

plans.

But this would be expected to cause adverse selection against the single risk pool – an impact

that the state does not consider but that would be expected to increase benchmark plan premiums. In

addition, if more consumers shift from higher AV plans down to copper plans than the state projects,

benchmark plan premiums will also increase.

Finally, if, as discussed above, administrative challenges make enrollment more difficult, it is healthy

people who are most likely to give up in frustration. Similarly, eliminating the government-operated

Health Insurance Marketplace, and relying on private vendors and insurance companies to operate

the enrollment functions could also cause adverse selection and higher premiums as healthier

individuals do not bother to seek out a new channel.

More accurate assumptions about pass-through, enrollment, and

premiums could result in the waiver failing under the coverage guardrail

As the discussion above shows, there are a number of different ways the state’s waiver could fail under

the coverage guardrail once the analytic deficits noted above are corrected. That is, it is likely the state

will fail to satisfy the statutory requirement that it “provide coverage to at least a comparable number

of its residents” as the ACA.

First, the analysis above notes that pass-through must be reduced by about $200 million (roughly 8%)

compared to the state’s current assumptions. If that funding is not replaced with state dollars, then

the state will have far less funding under its budget cap – indeed, their own analysis shows that a $200

million reduction would leave them with less funding than they need to provide financial assistance to

everyone who receives it under current law. If the state were to hit its budget cap when providing

financial assistance to fewer people than current law, then those denied assistance would almost

certainly remain uninsured – meaning the state’s waiver would cover fewer people. (The waiver would

also fail the affordability guardrail, as discussed above).

Second, higher premiums can generate a coverage guardrail violation, even if the $200 million in

missing pass-through funding was replaced. Higher premiums would mean higher subsidies per

See Actuarial Analysis at 30.

See Waiver at page 18-19.

covered person, which could result in the state hitting its budget cap while enrolling fewer people than

projected. Under their projections, the state’s budget cap allows them to provide financial assistance

to 25,570 more people than current law. But if benchmark premiums were 6% higher than they would

be without the waiver, that would likely cause the state to hit the cap while enrolling fewer people than

would be enrolled under current law.

Accounting for the analytic gaps noted above could suggest

premium changes of that magnitude – similarly violating the coverage (and affordability) guardrails.

Finally, correcting for the implausible assumptions about enrollment and giving proper consideration

to the factors that could depress enrollment, it could also be the case that the state simply enrolls fewer

people than current law – even without hitting its budget cap – since fewer consumers successfully

navigate the enrollment process.

Clear guardrail violations

To summarize, a fair reading of either the text of the statute, or even of the administration’s 2018

guidance that unlawfully attempts to loosen the statutory guardrails, makes clear that Georgia’s waiver

is unapprovable. Without needing to consider any detailed analysis of the state plan, the waiver

violates the affordability guardrail by driving consumers toward less affordable copper plans, by

repealing the requirement that issuers offer gold plans, and by using a budget cap that prevents the

state from claiming that affordable plans are available to all eligible residents. Further, the waiver

analysis includes clear objective errors – like ignoring lost employer mandate revenue and overstating

HealthCare.gov savings – that make it impossible for the numbers to add up as claimed. Finally, even

a cursory examination of the factors likely to influence consumer behavior and premiums make clear

that the assumptions employed in the analysis are too optimistic, potentially resulting in lower

enrollment and higher premiums than projected, triggering the cap and violating the affordability, and

potentially the coverage, guardrail.

In the next section we turn to procedural problems that underscore that approval of this waiver would

be unlawful.

Procedural failures

Shortcoming of the economic and actuarial analysis

As discussed above, the Georgia application’s economic and actuarial analysis is characterized by

numerous serious analytic gaps that render it insufficient to satisfy the regulatory requirements for a

complete application. To briefly restate the shortcomings:

• The analysis fails to consider the impact of repealing the requirement that issuers offer silver

and gold plans, which would be expected to lead to erosion in the availability of gold plans –

an obvious impact that the state ignores.

• The waiver modeling asserts with no evidence that 25,000 additional consumers will enroll

because of increased access to coverage and marketing by web-brokers. Indeed, this naked

assumption is the core of all claims that the state makes about its waiver. As noted above, this

assumption seems implausible. The waiver creates no new methods for accessing coverage.

Web-brokers already exist, and Georgia’s waiver gives them no new tools to seek out

consumers nor additional incentive to conduct outreach beyond what they do today. To the

contrary, it is far more likely that the state will lose some existing consumers by eliminating

Aviva Aron-Dine, Tara Straw, and Sarah Lueck, Georgia’s 1332 Waiver Proposal Puts Coverage at Risk for Tens of

Thousands, CENTER ON BUDGET AND POLICY PRIORITIES, January 23, 2020,

https://www.cbpp.org/research/health/georgias-1332-waiver-proposal-puts-coverage-at-risk-for-tens-of-thousands.

HealthCare.gov as an option and by undertaking an enrollment platform transition – which

has been the experience of states that have transitioned enrollment technology in recent years.

• The waiver makes similar unsupported and implausible assumptions about the share of new

enrollees who would be unsubsidized. Taken together, these shortcomings eliminate any

credibility in the application’s projections of premiums changes, which are driven by

enrollment changes.

• The waiver’s analysis entirely ignores the fact that consumers may elect plans outside of the

single risk pool (like short-term limited duration plans), despite the fact that the only new

opportunity the waiver provides to web-brokers is the ability to market those plans alongside

other plans.

• The state’s funding assumptions neglect the impact of reduced federal employer mandate

revenue – a factor that, when properly included, would reduce the state’s pass-through funding

by approximately $150 million in plan year 2022 alone.

• The actuarial analysis assumes that HealthCare.gov can entirely defray about $100 million per

year in lost user fee revenue through program savings. This is almost surely wrong, as

HealthCare.gov has substantial fixed costs. As a result, the state is likely to receive tens of

millions of dollars less per year in pass-through funding than it projects.

• It does not appear that state financial assistance will undergo “reconciliation,” but the analysis

does not consider how much this will increase the cost of state financial assistance. Available

figures suggest it could be tens of millions of dollars per year.

For all of these reasons, the state’s analysis does not provide a reasonably accurate picture of the

impact of the waiver and therefore fails to satisfy the requirements for actuarial and economic analysis

supporting the waiver application.

No meaningful state or federal comment period

The statute and its implementing regulations require “a process for public notice and comment at the

State level, including public hearings” and “a process for providing public notice and comment after

the application is received by the Secretary,” both of which must be “sufficient to ensure a meaningful

level of public input.” A meaningful state comment period has not occurred, and the document

submitted to the federal government does not allow for a meaningful federal comment period, either.

The state’s process to date does not constitute a proper state comment period. The state conducted

public comment on an entirely different waiver proposal. The initial draft proposed to offer Georgia

consumers plans that did not cover all of the ACA’s essential health benefits (EHB) – but those plans

would have had cost-sharing, actuarial values, and an out-of-pocket maximum unchanged from

current law. Commenters objected to the exclusion of EHB from Georgia plans, and the state reacted

by eliminating its proposal to allow plans to exclude EHB. But the state has never sought comment on

a proposal to allow plans to increase their deductibles and out-of-pocket maximums by $5,000. These

are different proposals, and comments on the former cannot be considered meaningful with respect

to the latter.

The document submitted to the federal government also contains major flaws that prevent it from

serving as the basis for meaningful federal comments. Given the weaknesses of the analysis noted

above, commenters lack accurate information about how this waiver would impact premiums,

coverage, and affordability. In addition, fundamental information about how the waiver would actually

operate is not available. The state fails to provide information about how it would operate its financial

assistance program. It provides very little details – and no budget – for how it would manage an

enormous takeover of technical responsibilities related to enrollment, disenrollment, and financial

assistance. The budget cap is a critical feature of the waiver and yet the state’s discussion of the cap is

limited to noting its existence and suggesting the state has a “plan” – without describing how that plan

would actually work. For example, the proposal offers no information on how the state would

determine when a cap is needed and how it would conduct the enrollment waitlist. This kind of

information is necessary for a comment period to be considered “meaningful.”

The waiver also provides essentially no detail on the operation of “disease management plans.” The

state seeks a waiver of Section 1302(b) – the requirement to cover essential health benefits – for the

disease management plans, but then notes that the plans will still be required to cover all ten EHB and

will simply have “flexibility” in meeting the EHB requirements. How that flexibility differs from

current policy is unspecified, other than an oblique reference in the actuarial analysis suggesting that

there will be “services the insurer cuts back on” in disease management plans.

The state’s initial 1332

proposal to waive EHB in its market has been abandoned (likely because it would have caused

premiums to increase by more than 50%, resulting in 110,000 people losing coverage

). The state’s

discussion of disease management plans seems to imply that this waiver of EHB will be more modest

than the original proposal – but the state has provided no information that would allow commenters

to understand that assumption.

Waiver is not complete

For the same reasons that the waiver document cannot serve as the basis for meaningful public

comment, it also cannot be considered complete. The gaps in the analysis and the absence of discussion

of major operational considerations mean the waiver cannot be declared complete by the federal

government.

More specifically, the regulations require a specifically enumerated list of data elements that the state

has not provided. The state is directed to provide “information on the age, income, health expenses

and current health insurance status of the relevant State population; the number of employers by

number of employees and whether the employer offers insurance; cross-tabulations of these variables;

and an explanation of data sources and quality.”

No information on age, income, or health expenses

appears in the waiver, cross-tabulations are not available, and data sources and quality are discussed

only in passing. Indeed, the state’s failure to provide these somewhat ministerial elements is perhaps

reflective of the fact that the state may not, in fact, have conducted the sort of analysis that the statute

and regulations contemplate, relying instead on general assumptions rather than a more careful

analysis of the waiver’s impacts.

No authorizing state legislation

Section 1332 requires that a state seeking a waiver enact (and include in the application) a state law

“that provides for State actions under a waiver under this section, including the implementation of the

State plan.” Georgia has seemingly passed no such law. It has passed a general statute – the Patients

First Act – that authorizes the governor to apply for a waiver and to implement waivers “in a manner

consistent with state and federal law.”

The problem is that without further legislation, implementing

It is noteworthy that the proposal submitted to the federal government does not provide a single example of the

deductibles and out-of-pocket maximums that the waiver would require – despite the fact that those dollar figures can be

easily calculated – making it more difficult for consumers to understand what this waiver would do.

See Actuarial Analysis at 32.

Aviva Aron-Dine, Tara Straw, Sarah Lueck, Georgia’s Unprecedented 1332 Waiver Would Endanger Consumers and

Violate Federal Law, CENTER ON BUDGET AND POLICY PRIORITIES, December 17, 2019,

https://www.cbpp.org/research/health/georgias-unprecedented-1332-waiver-would-endanger-consumers-and-violate-

federal-law.

45 CFR 155.1308(f)(4)(iii)(A).

Georgia General Assembly, 2019-2020 Regular Session – SB 106 “Patients First Act,”

http://www.legis.ga.gov/legislation/en-US/Display/20192020/SB/106.

the waiver is not consistent with state law. For example, the state has not enacted legislation to

authorize creation of the state eligibility tool. Without such authorization, implementing the waiver is

not seemingly “consistent with state…law.”

The state may argue that the Patients First Act provides blanket authority for the governor to

implement anything in a waiver. This would be an extraordinary grant of authority, and it is difficult

to imagine that the state legislature intended it. But this argument is also undermined by the rest of

the authorizing statute. In particular, another section of the Patients First Act authorizes the state to

seek a section 1115 waiver to increase Medicaid eligibility up to 100% of the federal poverty line. The

legislation then makes abundantly clear that the governor has authority to implement that change

without seeking additional authority: “[U]pon approval of the waiver, the [Georgia health department]

shall be authorized to take all necessary steps to implement the terms and conditions of the waiver

without any further legislative action" (emphasis added). In short, Georgia’s legislature knows how

to be clear that a waiver may be implemented without additional legislation. The fact that the 1332

section of the bill does not include such clear language indicates a different legislative intent in this

case. As a result, the state has not satisfied the requirement for legislation to implement the state plan.

And, indeed, in waivers like the one contemplated here – where implementation of the waiver would

result in residents being denied benefits to which they are entitled under federal law – state legislation

authorizing the deprivation of benefits plays an especially important role in ensuring accountability

for the waiver policy.

Copper plans may require waiver of provisions that 1332 cannot reach

Finally, under Section 1332, the Departments are provided authority to waive only certain enumerated

provisions of the Affordable Care Act. Implementing Georgia’s proposal would arguably require the

Departments to waive provisions of law that cannot be waived under Section 1332. This is because the

ACA imposes its requirements related to health plan cost-sharing in two separate provisions of the

ACA, one of which can be waived under 1332 and one of which cannot.

Requirements related to health plan cost-sharing appear in ACA Section 1302, which can be waived by

a 1332 waiver, and Public Health Service Act Section 2707 (codifying ACA Section 1201), which cannot

be waived. ACA Section 1302(a) is definitional – it defines a constellation of health plan protections as

the “essential health benefits package.” One component of this package is the requirement that a plan

“limits cost-sharing for such coverage in accordance with” limits on total out-of-pocket spending as

described in 1302(c). Section 1302(c) caps total out-of-pocket spending at $8,150 for plan year 2020.

Public Health Service Act Section 2707(a) requires that all health plans in the individual and small

group market “shall ensure that such coverage includes the essential health benefits package required

under section 1302(a).” Taken together, this means that Section 1302(a) defines a package of reforms

to include a cap on total cost-sharing, while Section 2707(a) actually imposes that requirement on

health plans.

The copper plans in Georgia’s waiver would exceed the limits of section 1302 significantly – they will

have an out-of-pocket maximum that exposes consumers to at least $5,000 more in spending than

otherwise permitted. That is why Georgia has asked that the Departments waive the cost-sharing cap

of Section 1302(c). But Georgia cannot seek a waiver of Section 2707(a), which requires health plans

to offer a “package” that complies with the Section 1302(c) limit.

Therefore, even if Georgia receives a waiver of Section 1302(c), the requirement of Section 2707(a) is

arguably still binding on all individual market health plans, including the new copper plans. In that

case, it would be unlawful for copper plans to be sold because they exceed the $8,150 limit.

This same logic applies to the requirements of Section 1302(d), which requires plans to have an

actuarial value of 60, 70, 80, or 90%. Section 1302(a) defines the “essential health benefits package”

to also include complying with the actuarial value requirement of 1302(d), and that requirement is

therefore imposed on all plans via Section 2707(a).

But copper plans would have an actuarial value

of 50%, and would therefore violate this requirement of Section 2707 as well.

The Departments may argue that their authority to waive Section 1302 effectively modifies how

Section 2707 operates in the state. In assessing the plausibility of this claim, one should note that the

statutory text expressly denies the Departments the authority to waive Section 2707, and there are

generally reasons to be skeptical of the agency’s attempt to expand the scope of their own waiver

authority.

An approval of the waiver is not likely to hold up in federal court

For all of the reasons enumerated above, the Departments lack authority to approve Georgia’s waiver

proposal. It violates the statutory guardrails, the requirement to provide an accurate and adequate

actuarial analysis, several other procedural requirements, and even the Administration’s own

weakened interpretation of the guardrails. Approval would exceed the Departments’ authority under

Section 1332. If the Departments were to approve the waiver, a lawsuit against the federal government

and Georgia would be expected to prevail.

Establishing standing to challenge the Georgia waiver is fairly straightforward. If approved, the waiver

will result in some Georgia consumers enrolling in plans with higher deductibles than otherwise

allowed under federal law. That is not a speculative claim; rather, it is a core function of the waiver.

Georgia health care providers will therefore face higher uncompensated care burdens associated with

uncollected revenue below the deductible. Some of today’s uncompensated care is associated with

consumers failing to pay amounts under current-law deductibles

; increasing those deductibles by

another $5,000 will drive uncompensated care burdens higher.

Consumers also face concrete and particularized injury associated with the budget cap. For example,

any Georgia enrollee receiving financial assistance under current law has reason to fear she will lose

financial assistance under a cap. Further, Georgia residents who frequently churn in and out of

employer-based health coverage are likely to need to enroll in coverage with financial assistance mid-

year, at a time when the state is most likely to have hit their budget cap, generating an especially

significant source of concern. And Georgia consumers face similar harm from the potential for gold

plans to become unavailable.

Having established standing, challengers to the waiver could demonstrate that Departmental approval

of the waiver is ultra vires (that is, it exceeds the authority committed to the agency) and arbitrary and

capricious:

• Section 1332 grants the Department authority to approve a waiver only if it provides

“protections against excessive out-of-pocket spending that are at least as affordable” as the

ACA. Georgia’s waiver increases consumer exposure to out-of-pocket spending by $5,000 and

facially fails to satisfy this requirement.

• The Administration's unlawful attempt to interpret 1332 to require only an analysis of the

number of consumers to whom affordable coverage is “made available” is no help to Georgia

or the federal government. The waiver’s budget cap means current law makes affordable

One of us (Levitis) wrote previously that these Section 1302 requirements may “formally” be waived under a Section 1332

waiver but that the comprehensiveness and affordability guardrails significantly constrain flexibility to loosen these rules.

This issue has not been addressed in regulations or by the Courts. See Jason Levitis, Changes to State Innovation Waivers in

the Senate Health Bill Undermine Coverage and Open the Door to Misuse of Federal Funds, THE BROOKINGS INSTITUTION,

June 23, 2017, https://www.brookings.edu/blog/usc-brookings-schaeffer-on-health-policy/2017/06/23/changes-to-state-

innovation-waivers-in-the-senate-health-bill-undermine-coverage-and-open-the-door-to-misuse-of-federal-funds/.

Jeff Lagasse, Benefit Design, Higher Deductibles Will Increase Bad Debt for Hospitals, Healthcare Finance, November 22,

2019, https://www.healthcarefinancenews.com/news/benefit-design-higher-deductibles-will-increase-bad-debt-hospitals.

coverage available to at least 400,000 more Georgians than the waiver, so the waiver cannot

be approved on those grounds.

• A conclusion that Georgia’s waiver satisfies the coverage guardrail (i.e. the requirement that a

waiver provide coverage to as many people as would have it absent the waiver) “entirely fail[s]

to consider an important aspect of the problem” and is therefore arbitrary and capricious

under the test articulated by the Supreme Court in Motor Vehicle Manufacturers Association

v. State Farm Mutual Automobile Insurance Company. The analysis includes multiple

unfounded and implausible assumptions about behavior in response to the waiver. The claims

in the existing administrative record regarding the coverage guardrail rely on the unsupported

assertion that eliminating the HealthCare.gov enrollment channel without creating any new

options for consumers will somehow generate 25,000 new enrollees, a paradigmatic example

of an assertion “so implausible that it could not be ascribed to a difference in view.”

• Georgia’s waiver has not received a meaningful state or federal comment period as required

under the statute and its implementing regulations and does not comply with the Departments’

own requirements for waiver completeness.

• The Departments do not have authority to waive Section 2707 of the Public Health Service Act

requiring that individual market health plans comply with the ACA’s out-of-pocket limit and

actuarial value requirements, so the sale of copper plans may be unlawful even if the waiver is

approved.

In sum, if the Departments were to approve this waiver, the federal government and Georgia should

be bracing for a grueling and expensive legal battle that challengers would be expected to win.

The USC-Brookings Schaeffer Initiative for Health

Policy is a partnership between the Economic Studies

Program at Brookings and the USC Schaeffer Center

for Health Policy & Economics and aims to inform the

national health care debate with rigorous, evidence-

based analysis leading to practical recommendations

using the collaborative strengths of USC and

Brookings.

Questions about the research? Email [email protected].

Be sure to include the title of this paper in your inquiry.