Section 1332 Waiver Activity Heating Up In States

Editor’s note: This post describes recent state activity regarding ACA Section 1332 State Innovation Waivers. It updates a December 5, 2014 Health Affairs Blog post by the authors.

This week, the health policy world is focused on the pending Supreme Court decision in King v. Burwell and potential state reactions to a ruling for the plaintiffs. A few states are actively planning strategies for maintaining subsidies for their residents in the event of an adverse ruling, but for most, the process is rife with challenges both political and operational. Though King looms, don’t lose sight of other recent state action on the Affordable Care Act (ACA) front.

In particular, interest in Section 1332 waivers continues to heat up. As we’ve previously written, 1332 waivers offer states an opportunity to fashion a new coverage system customized for local context and preferences, while still fulfilling the aims of the ACA. The statute requires interested states to pass authorizing legislation as a first step, in order to apply for and ultimately implement waiver-based reforms.

Here is recent movement on 1332s:

• Last week, the Rhode Island legislature adopted a budget that included authorization for the state to pursue a Section 1332 waiver.
• The California Senate passed SB4 authorizing the state to apply for a 1332 waiver in order to allow undocumented immigrants to purchase private coverage on the exchange.
• Hawaii approved legislation last month to “[narrow] the scope of work of the State Innovation Waiver Task Force to facilitate the development of an Affordable Care Act waiver in a timely manner.”
• Minnesota passed legislation instructing the newly-created Task Force on Health Care Financing to consider opportunities under Section 1332.
• In New Mexico, the legislature considered the creation of an Innovation Waiver Working Group. The state’s Office of the Superintendent of Insurance established a temporary task force to examine the issue.
• The Governor of Arkansas has signaled that the future of the state’s innovative “private option” Medicaid expansion depends on a 1332 waiver. In April, 1332-related legislation was recommended for study in the Senate Insurance and Commerce and the Arkansas Health Reform Legislative Task Force committees.

Virtually all of this activity took place within the last few months, and we anticipate more state signals no matter how the Court rules in King. State officials across the ideological spectrum see significant potential for 1332 waivers, though they have a lot of work to do in order to obtain a waiver and launch reforms on January 1, 2017, the earliest possible effective date.