§300gg–44 State flexibility in individual market reforms

Summary

States can run their individual health insurance market under an approved alternate plan instead of some federal rules, as long as everyone who is eligible can pick coverage, the plans do not exclude people for preexisting conditions, at least one choice is as broad as the state’s usual comprehensive plan, and the state uses one of three approved approaches. The alternate plan can be one program or a mix (for example, a high-risk pool, required conversion policies, guaranteed issue of one or more plans, or open enrollment by insurers). By April 1, 1997 the governor had to tell the Secretary that the state had passed or would pass the laws needed by January 1, 1998 (or by July 1, 1998 for states whose legislature did not meet during the 12 months after August 21, 1996) and give information the Secretary asks for. The state must update that information every 3 years. The Secretary will review the plan, tell the state if it is not acceptable, and give the state a chance to fix it. If the state still does not meet the rules, the Secretary will end the alternative plan and the federal rules will apply from a date the Secretary names. If a state sends the notice after January 1, 1997 and the Secretary does not make a negative finding within 90 days, the plan is treated as acceptable 90 days after that 90-day review period ends. The three approved approaches named in the law are: the NAIC model acts adopted June 3, 1996; a qualified high-risk pool that covers eligible people without preexisting condition exclusions and follows NAIC standards as of August 21, 1996; or a system that either shares or offsets insurer risk (or subsidies insurers) or gives each eligible person a choice of all available individual plans.