May 8, 2019
By Naomi Lopez
Lawmakers in the U.S. House of Representatives are set to vote tomorrow on a bill that would severely limit the use of state innovation waivers under the Affordable Care Act (ACA, commonly known as Obamacare) law. Section 1332 of the ACA allows states to seek approval for more flexibility in using ACA subsidies to provide healthcare coverage and services.
The law under consideration, Protecting Americans with Preexisting Conditions Act of 2019, basically says that: We don’t think Trump administration guidance on using these waivers should be allowed because it provides a different interpretation of what might be allowed than what the Obama administration said.
Unfortunately, the proposed law offers no parameters for evaluating what should be allowed and why. Nor does it provide any suggestions for how a state should relieve the climbing uninsured rates, reduce the ACA premiums (which have more than doubled in many markets), or how to better ensure access to care for those with an insurance card but with little access to care. Before lawmakers slam the door on potential state-based, innovative solutions to providing better healthcare access and affordability, there are three things they should know:
1. The ACA allows states to innovate.
Section 1332 of the ACA allows states to seek flexibility or to be exempted from up to eleven statutory requirements of the law. The Obama administration issued guidance on these waivers in 2015. Unfortunately, the guidance was so strict that it really didn’t leave much room for states to innovate. In October of last year, the Trump administration issued new guidance that provides more opportunities for states to redirect ACA subsidies to offer a more robust set of options for healthcare coverage and care.
2. 1332 waivers can increase healthcare access and affordability. These waivers give states flexibility to re-imagine healthcare in their borders.
Too often, families face a welfare cliff where, when they take a new job or accept a pay raise, they lose all Medicaid benefits. Imagine a state being able to temporarily help to subsidize individuals moving from the Medicaid rolls to employer-based coverage, providing a savings account for out-of-pocket expenses without having to move onto the exchange—with a set of coverage benefits that more closely match their unique needs and preferences.
And imagine a family whose breadwinner loses their job and their employer-sponsored healthcare coverage. Rather than facing the prospect of being uninsured, the family could obtain a subsidy to purchase a short-term insurance plan and pay for routine care while in-between jobs. In this case, the family would not be thrown into the ranks of the uninsured, and they would have some security in knowing that they could obtain services when needed.
3. Based on the title of the bill, one might mistakenly believe that the newer guidance strips away protections for those with pre-existing conditions. It does not.
While it might score political points to repeat the name of the bill, the reality is that the ACA sets out clear requirements for protecting those with pre-existing conditions, and those protections are not waivable under a 1332 waiver. The new 1332 guidance allows states to pursue new approaches to delivering higher value and more affordable coverage, and it does so within the confines of the ACA law that requires pre-existing conditions protections.
There is no silver bullet for the challenges facing the American healthcare system, but slamming the door shut on state innovation is not the answer. States understand the complexities of their own unique populations’ needs. Attempts to enshrine top-down, one-size-fits-all rules and edicts are not only out of synch with the rapidly changing innovations in healthcare models and designs, they ignore the realities of how the ACA continues to fall short for so many Americans.
Naomi Lopez is the director of healthcare policy at the Goldwater Institute.