Section 1332 State Innovation Waivers: An Overview
As part of the Affordable Care Act (ACA), Section 1332 was created to allow states the ability to apply for a waiver from certain provisions of the ACA. These waivers are known as State Innovation Waivers and give states more control over their healthcare systems.
What are Section 1332 State Innovation Waivers?
Section 1332 allows states to waive certain requirements under the ACA, including essential health benefits and individual and employer mandates. To receive a waiver, states must submit an application that outlines how they plan to provide access to quality healthcare while maintaining affordability for consumers.
States must also show that their proposed changes will not increase the federal deficit, which is one of the main conditions for approval. If approved, states can use funds that would have been spent on premium subsidies or cost-sharing reductions in other ways that support their healthcare goals.
The purpose of these waivers is to promote innovation and experimentation at the state level without compromising consumer protections or patient access to care.
How do Section 1332 State Innovation Waivers work?
To obtain a waiver, a state must develop an implementation plan outlining how it intends to meet four guardrails:
1) Provide coverage as affordable as would be provided absent the waiver;
2) Provide coverage that is at least as comprehensive as what would be provided absent the waiver;
3) Provide coverage to at least a comparable number of residents; and
4) Not increase federal spending.
Once submitted, applications are reviewed by both CMS (Centers for Medicare & Medicaid Services) and HHS (Department of Health & Human Services). If approved, CMS will grant a five-year waiver period with potential extensions up to ten years.
During this time period, states have broad flexibility in designing their own health insurance programs. They can experiment with different benefit designs or payment models while still being held accountable for meeting all four guardrails laid out in their implementation plan.
What are the benefits of Section 1332 State Innovation Waivers?
Section 1332 waivers provide states with an opportunity to address specific healthcare issues unique to their state. States can experiment with new approaches and programs, which may lead to improved health outcomes and greater consumer satisfaction.
Additionally, these waivers allow for more flexibility in how states use federal funds. Instead of being limited to premium subsidies or cost-sharing reductions, states can use this money for other purposes that align with their healthcare goals.
Moreover, Section 1332 waivers have bipartisan support as they offer a way for both Democrats and Republicans to work together on improving the healthcare system. By allowing states more control over their healthcare systems without sacrificing consumer protections, these waivers represent a compromise between those who want more federal oversight and those who believe in state autonomy.
What are some examples of successful Section 1332 State Innovation Waivers?
Several states have already applied for and received approval for Section 1332 waivers. In Maryland’s waiver application, they proposed using federal funds to create a reinsurance program designed to lower premiums by up to 30 percent in the individual market. Similarly, Minnesota used its waiver authority to establish a “MinnesotaCare Buy-In” program which allows residents earning more than $50k annually but less than $100k access affordable health insurance options.
Another example is Hawaii’s Prepaid Health Care Act (PHCA), enacted in 1974 before the passage of the ACA. PHCA requires most employers in Hawaii provide health insurance coverage for employees working over twenty hours per week or earning at least $1,000 per month regardless of pre-existing conditions or health status. The law has been credited with reducing uninsured rates while not causing job losses or business closures among smaller companies in Hawaii.
Conclusion
Section 1332 State Innovation Waivers offer an avenue for innovation within our nation’s healthcare system while maintaining consumer protections and affordability standards set forth by the ACA. While these waivers are not a panacea for all healthcare issues, they have the potential to provide states with more control over their healthcare systems and lead to better health outcomes for their residents. As more and more states seek approval for Section 1332 waivers, it will be interesting to see what programs and solutions emerge as successful models that can be replicated in other parts of the country.