Beware! New Guidance on Section 1332 Waivers Opens 
the Way for Serious Harm

Under Section 1332 of the Affordable Care Act, states are allowed to apply for state innovation waivers that waive certain parts of the act’s requirements¹ for private health insurance and marketplace coverage.

The statute establishes that states that waive these requirements still must show that the proposal:

(A) will provide coverage that is at least as comprehensive as the coverage defined in section 1302(b) [referring to essential health benefits] and offered through Exchanges established under this title as certified by Office of the Actuary of the Centers for Medicare & Medicaid Services based on sufficient data from the State and from comparable States about their experience with programs created by this Act and the provisions of this Act that would be waived;

(B) will provide coverage and cost sharing protections against excessive out-of-pocket spending that are at least as affordable as the provisions of this title would provide;

(C) will provide coverage to at least a comparable number of its residents as the provisions of this title would provide; and

(D) will not increase the Federal deficit.

The meaning of these guardrails is clear in the statute, although exactly how these statutory guardrails are measured has been set forth in guidance from the Department of Health and Human Services and the Treasury Department. In October 2018, however, the administration issued new guidance² that weakens or effectively eliminates these statutory guardrails through a fundamentally unsound reading of the clear legal language above. The guidance—if it stands up to potential legal challenge—can undermine key consumer protections, particularly for the most vulnerable people, including those in poor health, people with preexisting conditions, older people, and those with low incomes. It counts shoddy plans that provide few benefits to consumers as “coverage,” and it paves the way for federal dollars to subsidize these plans.

The public can still weigh in, and it is important that people do so both at the federal and state levels. At the federal level, you can comment through December 24, 2018, on this new guidance and urge the federal government to better protect consumers. It is as important to watch what your state is doing. States may propose waivers that are either good for residents or bad for residents—and you can get involved as your state develops a proposal. Once a proposal is developed, the public must be given 30 days to comment to the state before the state submits an application to the federal government. Further, if your state proposes a waiver to the federal government, besides commenting at the state level, you also can comment to the federal government about whether the proposal will help residents and should be approved, or will harm them and should be rejected.

Read the full analysis to learn how the new guidance undermines each guardrail.