Why the Section 1332 Waiver Process Must Protect Consumers
The various bills repealing the Affordable Care Act all took cracks at altering Section 1332, the part of the law that allows states to waive several private insurance provisions in order to establish state innovations. As Congress mulls changes to the health law this fall, it is important for policymakers to understand that consumer protections are a part of Section 1332 that must remain strong and should not be chipped away.
States can make major changes to coverage under a 1332 waiver – and Congress should retain or strengthen protections to ensure that these changes actually benefit consumers.
The Section 1332 state innovation waiver program is a useful tool for states
The waiver program has been helpful to states in ways that Congress might not have predicted when first drafting the ACA, and so it is important that this waiver authority remain in the law. For example, a waiver has helped Alaska establish a state reinsurance mechanism to lower premiums, a path that several other states are now taking. A waiver also helped Hawaii maintain a strong small business health insurance program that pre-dated the ACA.
These waiver programs were established according to laws, regulations, and guidance related to Section 1332 waivers that protects consumers and should be maintained.
How federal guardrails protect consumers
Current law says that any state innovation waiver must:
1) Provide coverage that is at least as comprehensive as that required for marketplace plans. Without this protection, benefit packages could exclude services needed by people with serious health conditions or cover only a small portion of their costs. People could find themselves unprotected when an accident or illness strikes.
2) Provide coverage and cost-sharing protections against excessive out-of-pocket spending that are at least as affordable as the ACA provides. This keeps premiums and cost sharing from rising for families that now get premium tax credits and financial assistance with their out-of-pocket costs. It also protects all consumers from waivers that might otherwise increase their costs.
3) Provide coverage to at least a comparable number of state residents as would have coverage without the waiver. This keeps federal funds from being diverted for another purpose that does not help as many consumers.
4) Not increase the federal deficit. Though not a consumer protection, this guardrail assures federal policymakers that a waiver will not strain the federal budget.
How the waiver approval process protects consumers
Allows for public comment: When states apply for a waiver, both the state and the federal government must allow a meaningful process for the public to comment on the proposal. The public process gives consumers (as well as other interested parties) a chance to raise any concerns about whether they still will get meaningful and affordable coverage under a waiver, and to ask other questions that the state might not yet have considered.
In states with federally recognized Indian tribes, the state must also meet with tribal representatives since a waiver program could affect their health coverage.
Allows for assessment of changes to coverage and costs: The waiver process also requires actuarial analysis, so experts can review state claims on the level of coverage that will be provided and expected costs. That type of specific information should be part of any meaningful public review process.
State lawmakers also have a role – since waivers may undo aspects of federal and state law, state lawmakers must enact legislation that provides for state implementation of the waiver provisions.
Protecting consumers after a waiver is granted
Under current law, a 1332 waiver program is time-limited, so it won’t be renewed if it does not meet the guardrails set forth in federal law. Furthermore, the federal government can amend, terminate, suspend, or withdraw a waiver that does not meet statutory requirements—for example if consumers don’t really have access to coverage that is as affordable and comprehensive would otherwise be offered.
Nothing stops the federal government from expediting waiver requests
One change lawmakers are proposing is to require very rapid review of 1332 waiver requests. Experience with Medicaid waivers suggests that requiring rapid review might have the opposite of its intended effect: Waivers could be turned down because federal and state governments will not have time to negotiate over areas of disagreement.
Furthermore, though Section 1332 gives the federal government up to 180 days to act on a waiver application, it could certainly act faster than that under current law. The checklist that HHS provided for reinsurance program 1332 applications is an example of a recent tool that can help a state meet application requirements and thus expedite approval.
Finally, the law already provides Congress with a tool to oversee federal review of 1332 waivers: If HHS determines that a waiver request should not be granted, the Secretary must notify the relevant committees of Congress regarding the reasons.