qotd: Stuart Butler on Section 1332 waivers

The JAMA Forum
April 28, 2015
Why Section 1332 Could Solve the Obamacare Impasse
By Stuart Butler, PhD

Section 1332 of the ACA, known as "State Innovation Waivers," allows
states, starting in 2017, to apply to the federal government for 5-year
renewable waivers from key provisions of the legislation. For instance,
states could request changes to or exemptions from the individual and
employers mandate, the market exchanges, the exchange subsidies, the
Essential Health Benefits requirements, and other provisions. Moreover,
states can combine waivers from ACA provisions with waivers from
Medicaid provisions (so-called 1115 waivers), Medicare, the state
Children's Health Insurance Program, and waivers available through "any
other Federal law relating to the provision of health care items or
services."

Section 1332, however, is not a blank check for states to ignore the
whole intent of the ACA, even assuming the White House or the next
administration were open to that. It has important fine print. To obtain
a waiver, a state's proposal must retain important protections, such as
guaranteeing that health plans accept an applicant regardless of their
health status or other factor. The proposal's coverage must be "at least
as comprehensive" and cover "at least a comparable number of its
residents" as the ACA, and insurance must be as affordable. Any state
plan must also be budget neutral for the federal government.

Even with these limitations on state plans, section 1332 could lead to
state health plans in the future that change the ACA beyond recognition.
A Republican state like Arkansas, Utah, or Texas, for instance, could
use the section to take the federal money for Medicaid expansion as a
block grant and turn it into subsidies for families to buy private
coverage. These or other states could also end the mandates on
individuals and employers, perhaps using government-encouraged
auto-enrollment for insurance to meet the ACA's coverage projections.
Meanwhile, states like Vermont, Oregon, and Hawaii could design waivers
to create a form of single-payer health system.

The political ramifications of this wide flexibility under section 1332
are immense. For instance, Republican opponents of the ACA, recognizing
that the foreseeable congressional makeup means outright repeal of the
ACA is not feasible even if Republicans win the White House in 2016,
would have a strategy for states to exit much of the ACA. Meanwhile
liberals in other states would have a tool to move closer to their dream
of a single-payer system. And the White House could claim that even in
the Republican states with sweeping waivers, the ACA had been fully
implemented. Moreover, the 1332 waivers would allow many of the
technical problems of the ACA to be fixed at the state level without
going to Congress.

http://newsatjama.jama.com/2015/04/28/jama-forum-why-section-1332-could-solve-the-obamacare-impasse/

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Comment by Don McCanne

Stuart Butler's name may be familiar to you as he was the policy expert
that described the Heritage Foundation's model of health care reform
that was a counter proposal to the Clinton effort, and later became the
model that formed the basis of the Affordable Care Act. We should take
heed of his words on the potential of the state innovation waivers
authorized by Section 1332 of the Affordable Care Act.

After ultraconservative Sen. Jim DeMint became president of the Heritage
Foundation, Stuart Butler moved to the Brookings Institution and was
thus less handicapped than he had been with the extreme right-wing
political polarization at Heritage. His recent messages have been
directed toward solutions that supposedly defuse the politics so that we
can move forward on policy.

Without repeating any of his points made above, obviously he believes
that the states should move forward with their own concepts of reform
that would comply with their respective political climates. However,
most of the flexibility he suggests would appeal to conservatives,
though he mentions single payer to appease those in liberal states.

The problem is that Section 1332 is quite amenable to piecemeal measures
that would gradually move health care further in the direction of a
system that places more of the responsibility on the individual, making
health care less affordable and less accessible (as if it were not bad
enough already). Yet Section 1332 waivers cannot lead to single payer
without enabling comprehensive federal legislation. Section 1332 is a
setup for conservative policies, yet hardly opens the door for single
payer. Acting on a state level alone, liberals cannot expect much more
than tweaks to the Affordable Care Act.

Stuart Butler is now even better positioned to drive the dialogue on
reform. If the politicians continue to listen to him, forget the dream
of a more egalitarian system.