Section 1332 Waiver
On July 2nd, 2019, Governor Wolf signed Act 42, which permitted Pennsylvania to apply for a State Relief and Empowerment Waiver under section 1332 of the Affordable Care Act (ACA). The Centers for Medicare & Medicaid Services (CMS) and the United States Department of the Treasury provide states flexibility to develop and implement reforms that address market challenges while maintaining the core protections and intentions of the ACA. The Section 1332 waiver empowers states to pursue innovative programs and modify certain rules outlined in the ACA to tailor healthcare coverage options to meet the unique needs of their markets and their residents.
State programs must meet four guardrails to take advantage of this waiver. A waiver program must:
- provide coverage that is at least as comprehensive as ACA coverage;
- provide coverage that is at least as affordable as ACA coverage;
- provide coverage to a comparable number of state residents; and
- not increase the federal deficit.
Pennsylvania’s Section 1332 waiver program was first approved in 2020.
Reinsurance Program Overview
When waiver applications are approved, they go into effect for up to five years, with an opportunity to apply for five-year extensions. Pennsylvania’s Section 1332 program uses funds from the Pennsylvania Health Insurance Exchange Authority (Pennie®) combined with federal funds saved by the program to partially reimburse insurance companies for costs associated with high-cost claims in the individual market. The reimbursement allows insurers to set lower premiums for all individuals purchasing their health insurance through the individual market. The program benefits are particularly important for those who do not qualify for federal tax credits. Pennsylvania’s reinsurance program is "invisible" to consumers, who continue to enroll in coverage and seek care under their policies as they always have. A consumer's experience and benefits are not impacted.
Reinsurance Program Outcome
Pennsylvania's waiver application was approved in 2020, with the initial five-year term in effect from January 1, 2021, through to December 31, 2025. The primary goal of the reinsurance program is to promote a competitive and equitable insurance market for consumers. Since the inception of the program, the outcome has resulted in moderate premium savings that range from four to six percent annually from what premiums would have been without the program. Over the period of the waiver program, enrollment in the individual market has steadily increased, and the uninsured rate in Pennsylvania has decreased.
Individual Enrollment from 2020 to 2024
2020
| 393,000
|
2021
| 414,000
|
2022
| 432,000
|
2023
| 440,900
|
2024
| 488,200
|
* Table Notes: Enrollment rounded to nearest thousand. Increase in enrollment is driven by multiple factors, including federal initiatives to enhance subsidies.
Uninsured Rate in Pennsylvania
* Table Notes: Uninsured Rates: American Community Survey, “Health Insurance Coverage Status and Type of Coverage by State and Age for All People”, 2013-2022:
https://www.census.gov/data/tables/time-series/demo/health-insurance/acshi.2013.htm.
Waiver Extension Application – Public Forum and Comments
Pennsylvania anticipates applying to extend the Section 1332 waiver program for an additional 5-year term. Each year, the Department has hosted a public forum to provide updates and answer questions about the reinsurance program. This year, as part of that public forum, Pennsylvania seeks public comment to support its extension application. To continue the program for an additional five years, Pennsylvania must complete an Actuarial and Economic study to support the extension. If Pennsylvania moves forward on an extension application, the report will be included in its Section 1332 State Relief and Empowerment Waiver Extension Application. The public may comment on that report in the context of any public comment on the proposed application request.
The Department has scheduled two public forum sessions, as described in its Pennsylvania Bulletin Notice 2024-16. Public comment is invited until the close of the comment period on Thursday, November 14, 2024.
E-mail comments or questions to ra-in-pa1332waiver@pa.gov with the Subject Line: Section 1332 Extension A&E Comments.