Partisan disagreement over the Affordable Care Act’s individual and employer mandates and state health benefit exchange marketplace has jammed the gears of the federal government machinery, leading to a partial government shutdown that began this week. All the strum und drang over these ACA provisions, however, could end up being over a temporary circumstance lasting only three years in at least some states.
Beginning in 2017, ACA Section 1332 titled Waiver for State Innovation allows states to petition the U.S. Department of Health and Human Services for — as the title suggests — a waiver allowing them to opt out of these requirements. The waiver also extends to premium tax credit subsidies and cost sharing reductions for plans sold on the exchange marketplace.
That means states that don’t like the ACA’s approach to restoring their individual and small group markets to functioning can devise their own programs after three years of complying with federal mandates.
The Section 1332 waiver comes with some provisos. States opting out of the ACA rules would have to demonstrate their programs would ensure individual and small group plans would offer coverage at least on a par with plans providing the 10 essential benefits prescribed by the ACA. State programs would also have to ensure residents and small employers have access to coverage with affordable premiums and protections against “excessive” out-of-pocket costs (such as annual maximums) like those for ACA plans and cover a comparable number of residents as ACA plans.
Section 1332 also provides federal funding to aid states opting out of the ACA rules to set up their own programs. States receiving a Section 1332 waiver would be eligible for “pass through” funding operating like an annual block grant. The funding would cumulatively represent what state residents would otherwise be eligible to receive under ACA rules for premium tax credits, cost-sharing reductions and small business credits if they are ineligible for them under the state programs.
Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email