1332 as a state block grant

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.



4 replies
  1. 1
    guachi says:

    I don’t mind block grants. But most block grants are disguised as cuts. As long as there is a real attempt to ensure states adhere to your four bullet points I’m fine with these waivers.

  2. 2
    Victor Matheson says:

    And I would follow up guachi by noting that block grants often come with very few strings attached, i.e., “Here’a a bunch of money for education, but it you want to use it to reduce property taxes, we’re ok with that.”

    I, too, am ok with waivers as long as you have an effective and powerful oversight bureaucracy both during the initial approval process and while examining outcomes.

  3. 3
    PhoenixRising says:

    Cover those people with the same or less cost sharing

    Cost sharing=between state & Fed here, not ‘no co-pays or premiums’, right?

    Here in New Mexico, we can afford to cover everyone, because we have enough PCPs and allied health providers who can afford to work for reasonable rates–everyone takes Medicaid. What we need is a 1332 compliant system that allows the working poor, which we lead the US in by share of adult population, to pay a $15-55/mo premium and a $5-20/service co-pay, sliding scale. The math works here, because we have so many healthy younger folks who can afford that.

    During open enrollment my only mitzvah this year was the blacksmith who works on my kid’s horses: He’s been appealing an SSDI denial for 23 months, since he got damn near killed at the racetrack (racehorses can’t be given a relaxing cocktail before they compete, for both obvious reasons and to prevent tampering, and they don’t all like having their hooves examined).

    He makes decent money, but it’s all been cash since 2015. He doesn’t need the stipend from SSDI, but he did not know that he could apply for an exchange plan & get enrolled in Medicaid because he appears indigent on paper. He’d be a LOT happier if he could tell everyone he knows that it’s a state plan that charges him a little bit, and so would the budget.

    He saw a doctor yesterday, at last, who has referred him to the private practice that takes mostly VA referrals. He’s been treated for the injury’s effects, and will be able to get a prosthetic that allows him to walk right, once the swelling is down.

  4. 4

    @PhoenixRising: Nope, Cost-sharing means same or lower co-pays/deductibles/out of pocket maxes.

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