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7 Things to know about Covered California’s §1332 Draft

On August 5, 2016, Covered California released a draft of California’s proposed Affordable Care Act (ACA) Section 1332 waiver to permit undocumented immigrants to buy health insurance on the State’s Exchange, albeit without federal subsidies. Here are 7 things to know from the draft.

  1. California is seeking federal waiver of the ACA provision that limits the Exchange to offering only Qualified Health Plans (QHPs). Under the ACA, only “[citizens] or [nationals] of the United States or [aliens] lawfully present in the United States” are eligible for QHP products. In order to allow undocumented individuals to buy health coverage on the Exchange, under the waiver Covered California will offer “California Qualified Health Plans” (CQHPs) – exact mirrors of QHPs – that will not be subject to the requirement that an individual be lawfully present in the United States. QHPs are health plans certified by the Exchange as meeting certain cost sharing, health benefits and quality requirements imposed under the ACA and California law.
  2. All Covered California issuers will be required to offer mirror CQHPs. The waiver proposal states that all QHPs offered on the Exchange will have an identical CQHP plan. A CQHP will have the same premiums, cost sharing, benefits and provider network as the corresponding QHP. Similarly, they will be held up to the same standards and requirements as QHPs. Because undocumented immigrants are ineligible for advanced premium tax credits and cost-sharing reductions, federal funds are not available to subsidize the cost of CQHPs. The waiver proposal includes the following table comparing the similarities and differences between QHPs and CQHPs.

1332-table-1

Source: Covered California Waiver Proposal, August 5, 2016

  1. Individuals and families can use a single application for coverage through the Exchange regardless of immigration status. Undocumented individuals currently can buy health care coverage in the non-exchange individual market, but the application process is separate from the Exchange. If the proposed waiver is approved, families will be able to all apply together through a single application. The proposal highlights that mixed-status families (those with documented and undocumented members) will benefit the most from the streamlined system under the waiver.
  2. CQHP coverage will be effective January 2019. Consumers can select CQHPs starting with open enrollment 2018 (November 2018 to January 2019), with coverage beginning January 2019. In order for the CQHPs and the streamlined application to be in place, other system changes and administrative updates will be required of the Exchange. The proposed timeline for the implementation of CQHPs is below and subject to comment and change.

1332-table-2

Source: Covered California Waiver Proposal, August 5, 2016

  1. The waiver meets all of the §1332 parameters set out by the federal government. According to the draft proposal, the waiver will not increase the federal deficit nor will it increase federal administrative functions, since Covered California is purely state-administered. The proposed waiver also meets the requirements of equivalent or greater scope of coverage (scope of coverage will increase), and equivalent or greater affordability of coverage (there will be no impact on affordability).
  2. Covered California estimates a modest 17,000 undocumented immigrants may gain health insurance through the Exchange, mostly from mixed-status families. This estimate comes from an updated California Simulation of Insurance Market (CalSIM) model (See Appendix B: UCB Center for Labor Research page 19 in waiver draft). The draft waiver states that the increase in coverage will come from mostly undocumented individuals with higher income levels and from mixed-status families where members are already enrolled in the Exchange. The draft waiver also states that nearly 50 percent of undocumented immigrants have been in the country for more than 10 years and approximately 17 percent of all children in California have an undocumented immigrant parent. Previous studies have shown that when a parent has insurance, their children are more likely to have preventative care and regular check-ups.
  3. Written comments from the public are due September 5, 2016. Written comments can be emailed or mailed to Covered California. There will be a public hearing on August 18, 2016 from 12 – 3 pm. Members of the public may participate in person or through a conference call.

Covered California intends to submit the final waiver proposal to the Centers for Medicare and Medicaid Services (CMS) during the first week of September 2016. CMS has six months to review and approve or deny the waiver. If approved, implementation planning will begin April 2017, about seven months after the waiver is received by CMS.

The full waiver proposal can be accessed here.

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