The Centers for Medicare and Medicaid Services (CMS) has made state flexibility and reform a cornerstone of its approach to dealing with problems created or exacerbated by Obamacare. In 2017, the Department of Health and Human Services sent two letters to governors highlighting the agency’s desire to work with states on innovative solutions to address access, affordability, and quality. CMS has followed through by rolling out a series of state-based reform initiatives.

Georgia and Tennessee may be next two states to benefit from this approach. If their proposals are approved by CMS, these states will add to growing list of state-based reforms that offer Congress a roadmap for legislative action.   

Georgia is seeking waivers in two major areas: its Medicaid program and its individual insurance market. In Medicaid, the state is requesting a variety of programmatic changes, including changes to give enrollees greater say in their benefits, to better align its operations with private insurance, to promote job training and work, and to facilitate greater oversight over eligibility. Rather than expanding eligibility to the mandatory Obamacare levels, the state would extend eligibility at a lower income threshold and would rely on normal federal match rates, not the enhanced rate included under Obamacare.

For the individual market, the state is requesting federal approval for a reinsurance program that would reimburse insurers for a percentage of high-cost claims, up to capped amounts. The state expects that this change will reduce premiums by an average of 10 percent statewide, with actual cuts ranging from 5 percent to 25 percent, depending on the region. The state is also seeking approval to set up its own web portal and separate itself from the federally run Healthcare.gov website. Unlike Healthcare.gov, the new portal would leverage private sector partners and enable consumers to shop and compare coverage options offered both on exchange and off the exchange.  

Tennessee is seeking approval for programmatic changes to its existing Medicaid program similar to those already approved for other states. In addition, the state is looking to restructure the way the state and federal government finance the program.

Today, the open-ended design of the Medicaid program means that there is no limit on spending. This creates a great deal of fiscal uncertainty for both state and federal budgets. Tennessee proposes setting federal spending share based on a set dollar amount for specific eligibility groups. This amount would be adjusted for enrollment, and any savings from not spent from the annual federal allotment would be shared 50-50 between the federal government and the state.

State initiatives like those proposed by Georgia and Tennessee build on CMS’s commitment to launch a much-needed reform-minded era for the federal-state health care programs. Critics of these state initiatives typically cavil about difficulties of process and legal authority, and often overgeneralize the policy effects. Yet, such criticism simply underscores how inflexible and rigid these programs are, how difficult it is to change the status quo, but also how important these reform efforts are for the sake of beneficiaries and taxpayers alike.

Using waivers and administrative actions for reform, however, is but a temporary fix, not a solution. Only Congress holds the key to a lasting solution: a reform platform that puts patients first and gives the states the regulatory relief and resources to make health care more affordable, more accessible and more accountable to those in their states. Until Congress acts on that platform, America will have to depend on these state-based initiatives, which are providing some measure of relief and laying the groundwork for future national reform.