Waivers are dead, long live waivers

At 10pm on Thursday, the Senate finally released a “repeal” bill—the Health Care Freedom Act—that may have the votes to pass. If you’ve been following the reporting, it’s mostly as expected. The bill repeals the individual mandate, delays the employer mandate until 2025, delays the implementation of the medical device tax until 2021, and defunds Planned Parenthood for one year.

But there’s one big surprise. Reports earlier in the day said that the Senate parliamentarian had ruled out the changes to the ACA’s waiver provision contained in the Better Care Reconciliation Act. (I wrote about BCRA’s waiver provision here.) The Senate went back to the drawing board, however, and the so-called skinny bill contains a slimmed down waiver provision.

Under the ACA, a state can get a waiver from most of the ACA’s rules only if it adheres to certain guardrails: a state has to cover as many people as comprehensively without increasing federal spending. Even then, the ACA says only that a waiver “may” be granted if those conditions are met.

The original version of BCRA would have wiped out those guardrails. All a state had to do was promise not to increase federal spending. If it did, BCRA said that the Secretary of HHS “shall” grant it—even if the state wanted to use the money to fund its public schools or a new stadium. A revised version of BCRA was mildly better on this front, but it retained the “shall” directive.

So too does the Health Care Freedom Act. Presumably because of the Senate parliamentarian’s involvement, however, the guardrails remain intact. The Secretary must therefore approve waivers if they adhere to the guardrails; if they don’t, he can’t.

But here’s the rub. The waivers are presumptively approved for 8 years—and they “may not be cancelled by the Secretary before the expiration of the 8-year period.” This 8-year lockout was also in BCRA, and here’s what I wrote about it at the time.

And once a waiver is granted, the Senate bill says that the federal government cannot terminate the waiver, no matter what. It is hard to overstate how unusual—even unique—this is. When the federal government offers money to states, it places conditions on how the states are to use that money—and reserves the right to cut off the states if they fail to adhere to those conditions. The cutoff threat is essential to prevent state abuse of federal funds.

The Senate bill removes that threat. It says that a waiver “may not be cancelled” before its expiration. If state officials blow the Obamacare money on cocaine and hookers, there’s apparently nothing the federal government can do about it. At the same time, the bill expands the duration of waivers from five years to eight years. The upshot, then, is that the next president won’t be able to renegotiate any waivers granted during the Trump administration, no matter how badly a given state might have abused its waiver.

So while the ACA’s guardrails are still in place, states can ignore them once a waiver has been granted. And there’s not a thing the federal government can do about it.

To my eyes, the legislation looks like an open invitation to states to submit farfetched waivers that purport to achieve the ACA’s objectives, knowing full well that, once a waiver is granted, they can’t be held to account if their residents lose coverage.

How the 8-year lockout made it past the Parliamentarian is beyond me. It has nothing to do with protecting the federal budget. It has everything to do, instead, with a Republican effort to prevent a future president from undoing waivers. And it may provide a backdoor way for states to undo some of the ACA’s most significant protections.


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