On June 22, 2020, Democrats in the U.S. House of Representatives introduced the Patient Protection and Affordable Care Enhancement Act (HR 1425). While the bill offers a lot of enhances to the current iteration of the Affordable Care Act (ACA), we wanted to focus on the provisions for state initiatives. Health Affairs writes:
HR 1425 would provide states with $200 million in federal grant funding to establish state-based marketplaces. These funds could be used for up to two years, and marketplaces would have to be financially self-sustaining by 2025. States would certainly be interested in this funding: leaders in Kentucky, Maine, New Jersey, New Mexico, and Pennsylvania have all announced plans to transition from HealthCare.gov to state-based marketplaces, following in the footsteps of a successful transition by Nevada.
Second, beginning in 2022, the bill would provide $10 billion in annual funding for states to 1) establish an individual market reinsurance program (which would not include grandfathered plans, transitional plans, or student health insurance coverage); or 2) reduce premiums and out-of-pocket costs for marketplace enrollees. States could thus choose to spend federal funds on reinsurance (as 12 states have already done) or on enhanced ACA subsidies (as California has recently done). Federal funding for these types of efforts would allow for experimentation and state-specific approaches.
States would have to apply for these funds but would be automatically approved unless the Department of Health and Human Services (HHS) notified the state otherwise. Approval would span five years total and could be revoked by HHS if a state failed to use the money as required. If a state did not apply for these funds, HHS would operate a reinsurance program in that state using an attachment point model.
Third, the bill would authorize $200 million annually in federal grants from 2022 to 2024 for states to develop innovative solutions to increase enrollment in the individual and small group coverage. States could use the funding to 1) explore ways to streamline their enrollment procedures (such as experimenting with auto-enrollment); 2) invest in technology to improve data collection and sharing; 3) implement a state-level individual mandate; and/or 4) conduct a feasibility study to develop a plan to increase enrollment.
If the bill gets passed it will be interesting to see if it encourages even more states to make the move off of the federally facilitated marketplace.