The waivers that could save Obamacare … if states want them to

This is important:

1332 waivers may also appeal to states with alternate Medicaid expansions, such as Arkansas and Iowa. So far, these so-called private option expansions, which enroll Medicaid-eligible individuals into private coverage, operate through Section 1115 waivers, which predate the ACA. But states may find the budget neutrality requirements of 1115 waivers to be overly restrictive. The ACA calls for a streamlining of the waiver process, whereby states can ask for 1115 and 1332 waivers in one application. As John McDonough wrote earlier this year, this combined waiver process could give states much more flexibility. For example, an 1115 waiver proposal that would not be independently budget-neutral could become acceptable in conjunction with a related 1332 waiver proposal. States will have greater ability to craft applications that meet the needs of their intended reforms.

But next year’s Supreme Court term could have major ramifications on alternate expansion states and for 1332s more broadly. The innovation waivers offer states unparalleled flexibility in large part because they let them repurpose hundreds of millions of dollars in tax credits. In King v. Burwell, though, the Court will determine the availability of tax credits to residents of states that have not established exchanges. A ruling in favor of the plaintiffs would decimate the funding source for 1332-based reforms in those states.

Thus, such a ruling would hamstring red states in particular. Policymakers seeking conservative, market-oriented changes to ACA at the state level would be stymied even before their reforms get off the ground. Only states that have established their own exchanges would have the freedom and funding to undertake broad 1332-based reforms.

Go read the rest by Heather Howard and Galen Benshoof on the Health Affairs blog.


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