State waivers and the next Supreme Court ACA challenge

A recent Health Affairs blog post by Heather Howard (a familiar name to AHCJ members who have attended the panels or webcasts she’s done for us) and her colleague Galen Benshoof at the State Health Reform Assistance Network (housed at Princeton) outlined an aspect of the coming King case on exchange subsidies. The information was new to me, and may be unfamiliar to other reporters too. I’ve summarized the key points below and included story ideas at the bottom. You can read the original (more detailed) post here.

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Image by HoustondwiPhotos mp via flickr.

The Affordable Care Act (ACA) encourages state innovation in many ways, but one of the most significant is the “Wyden waivers” or the State Innovation Waivers program in section 1332 of the law. They become available in 2017, although planning can start earlier.

Some states are thinking about taking these waivers,  which include “exchanges, benefit packages, and the individual and employer mandates.” States can get all the federal money that would have gone into those provisions – hundreds of millions or even billions of dollars – but they have to provide comparable coverage and it must be affordable. HHS and Treasury have released some guidance but not a whole lot of detailed rules and instructions.

Some states are opting to take these waivers. Vermont may use a waiver to pursue its version of single payer. Hawaii is exploring changes to its individual market. Minnesota may make changes to its Basic Health Plans. (These states are all implementing the ACA.) Some states doing or contemplating Arkansas-style private options for Medicaid may also explore the waiver option.

But one of the funding streams for the states are the subsidies for individuals and families getting covered in the exchanges – and in the federal exchange states, that’s precisely the funding that’s threatened by King v. Burwell. If the Supreme Court strikes those subsidies it “would decimate the funding source for 1332-based reforms in those states.” And that includes conservative states that may be more inclined to try to develop a non-ACA more market-based approach to coverage.

Here are some questions worth exploring in your state:

  • Is anyone considering using the 1332 waivers? For what?
  • How far along are the discussions?
  • What does your state need to go ahead, and what’s the timetable? And what’s the fallback?


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