State 1332 Waiver Update: Vermont and Hawaii

Section 1332 of the Affordable Care Act allows states to request a waiver for certain provisions of the law in order to implement a state reform that will provide health coverage that is as affordable and as comprehensive to at least the same number of people.

Waivers can go into effect as early as January 2017, and advocates around the country have been watching to see what reforms states will propose. Learn what advocates should know about these waivers

So far, two states—Vermont and Hawaii—have submitted proposals to the federal government that are now under review. Once the Department of Health and Human Services and the Department of Treasury deem the state’s application complete, they will post the applications for public comment. Our earlier analysis explains how states must preserve consumer protections for vulnerable populations.Here is the roundup of what states are requesting.

Two states propose changes to SHOP (the marketplace for small businesses)

• Vermont wants to waive the requirement to maintain a website where people can enroll in the SHOP (the Small Business Health Options Program). Instead, Vermont Health Connect’s website (the state marketplace where individuals enroll in coverage) would include educational and online tools to allow employees to compare plan choices, but insurers would directly enroll small businesses and their employees into plans. In Vermont, the marketplace sells all individual and small business insurance–there is no outside market. The state has standardized benefit designs, which means that Vermont’s health insurers must offer certain choices of plans to each small business employee. Vermont has faced technological challenges with its SHOP website and believes that enrolling employees of small businesses directly will be easier.
• Hawaii wants to waive SHOP requirements, which do not mesh well with its Prepaid Health Plan—a 40-year old state law that requires Hawaii employers to cover their employees. Hawaii’s law requires employers with at least one employee working at least 20 hours per week to provide health coverage. Employees pay, at most, 1.5 percent of their wages for this coverage, which is as comprehensive and valuable as a platinum or gold plan. Therefore, Hawaii wants to waive the requirement to provide silver plans, which are less comprehensive than what the state already requires, and wants employers to directly purchase plans instead of using SHOP.Additionally, the money that would have gone to help small business employers offer financial assistance to pay for health coverage under the ACA will instead go toward helping small business employers pay their share of employee premiums.

Coming Soon: California’s proposal to move closer to coverage for all

California recently passed legislation authorizing the state to apply for a waiver. The waiver would allow undocumented immigrants to buy health coverage (without financial help) through Covered California, the state’s marketplace. Since undocumented immigrants are not eligible for financial help under federal law, they would use their own money to buy health insurance. California will likely submit this waiver request to the federal government in the near future