The Section 1332 waiver in the Affordable Care Act (ACA) is a state innovation waiver. It allows states to meet or beat the standard coverage of the ACA through whatever means possible. The state can use the funds that the federal government would have used for Premium Tax Credits (PTC) and Cost Sharing Reduction (CSR) subsidies to fund the state plan. There are four major guardrails that measure whether or not a state’s proposal qualifies. A 1332 must:
- Cover at least as many people
- Cover those people at least as well
- Cover those people with the same or less cost sharing
- Cost the federal government no more than the federal government would otherwise spend.
The current guidance tightly defines these criteria. The Alexander-Murray Senate bill proposed looser criteria.
There have been a good amount of interest in states using 1332 waivers.
Some of the waivers are minor technical changes; Hawaii is using an approved 1332 to close the state SHOP exchange and use that funding for another pre-ACA state program that performed a similar function.
Other changes are significant. Alaska, Oregon and Minnesota have approved re-insurance waivers that use some of the APTC/CSR money to fund reinsurance in order to bring down non-subsidized premiums. Iowa and Oklahoma have very ambitious, conservative leaning proposals that they pulled in the Fall of 2017 because the Center for Medicare and Medicaid Services was not going to rush their analysis. Idaho has an extremely creative waiver it released that integrates Medicaid and the ACA in a creative fashion with creative rules lawyering.
One of the interesting things, to me at least, is that the waiver process is not being framed as a state level block grant. The states are given quite a bit of freedom to choose a “better” method that fits their local needs. Once the waiver is approved, the federal government writes a big check and then performs light monitoring of the state’s customized program. That to me sounds like a block grant.