Sunday, March 16, 2014

Obamacare to be repealed and replaced in 2017...

In at least one state, that is.

Almost everything that Republicans who profess to want to reduce the ranks of the uninsured on the ACA's scale say they want to do can be done via state waivers effective 2017.

Here is a summary of ACA Sec. 1332, Waiver for State innovation, from an ACA outline posted on the Democratic Policy and Communication Center website:
Beginning in 2017, allows States to apply for a waiver for up to 5 years of requirements relating to qualified health plans, Exchanges, cost-sharing reductions, tax credits, the individual responsibility requirement, and shared responsibility for employers. Requires States to enact a law and to comply with regulations that ensure transparency. Requires the Secretary to provide to a State the aggregate amount of tax credits and cost-sharing reductions that would have been paid to residents of the State in the absence of a waiver. Requires the Secretary to determine that the State plan for a waiver will provide coverage that is at least as comprehensive and affordable, to at least a comparable number of residents, as this title would provide; and that it will not increase the Federal deficit.
The text of ACA Section 1332 provides that "A State may apply to the Secretary for the waiver of all or any requirements described in paragraph (2) with respect to health insurance coverage within that State for plan years beginning on or after January 1, 2017."  Paragraph 2 lists core provisions of the ACA, including essential health benefits and required actuarial values of qualified health plans  (Sect. 1302),  cost-sharing reductions for lower-income exchange participants (Sect. 1402), and tax provisions relating to the individual mandate and eligibility for subsidies.

It looks to me -- and I would like to float this question to various experts in coming days -- as if virtually every service-related provision of the Coburn-Burr-Hatch  "repeal and replace"" proposal floated in February (the so-called Patient Care Act) could be implemented at the state level. Rejiggered premium subsidies? Check. Stripped down essential health benefits? Check. Health plans with lower actuarial values deemed compliant? Check. Replace the individual mandate with a combination of continuous coverage protection, one-time or periodic open enrollment, and auto-enrollment (with opt-out) of the unemployed or low-income in catastrophic plans? Check.

Flexibility from HHS in granting waivers for state proposals has been prefigured by HHS's willingness to grant state waivers for privatized Medicaid expansion.  Of proposals submittd thus far, Don Taylor of Duke says, "I'm sure there's something the administration would say no to -- we should find out what that is. The administration is desperate to say yes."

The flagship of such red-state expansions has been the "private option" implemented in Arkansas, which puts Medicaid-eligible applicants into private plans offered on the Medicaid exchanges, and which recently survived a renewal challenge in the state legislature. The Arkansas legislature continues to pursue conservative goals in implementing its private option, including imposing cost-sharing responsibilities on beneficiaries earning as little as 50% of the Federal Poverty Level and establishing Health Savings Accounts for  beneficiaries (i.e., those eligible for Medicaid under federal ACA rules).

Back in January, when renewal of the Arkansas plan was in doubt,  Michael Leavitt, former HHS Secretary under George W. Bush and a three-time Utah governor, whom the Arkansas state government has hired to help apply for further waivers to implement these reforms, offered a psyche-up to Republican state lawmakers at a Public Health Committee hearing. David Ramsay of the Arkansas Times relayed Leavitt's pitch :
I am of the strong view that much of what is wrong with our country can be fixed if more opportunity is provided by states...I wanted to tell you how valuable what you're doing is... The United States are watching. This is not just pioneering, it is truly transforming. It’s using government for what government should be done for [and] allowing the marketplace to begin to work in a way that will be in fact transformative. Different things have come together to present this opportunity.

The more flexibility the federal government gives the states, the more reform that will be there. That’s a historic tension that’s gone on a long time. But the reason I have come here is that this is a very important moment not just for Arkansas, but for other states. What happened is that through whatever circumstances you’ve been able to get it done. You’ve got the federal government to agree to a series of reforms that they up to this point have not been willing to do. And there are lots of other states who are seeing that flexibility. If it’s done well and done continuously, that’s the way reform happens in this state-federal system. A state gets it done. Others begin to follow.
That formula goes double for waivers to reshape a state's program for meeting ACA coverage goals. For all the politically-driven Republican demonization of the ACA, it's a "conservative" reform not only in its private-market structure but in its federalist flexibility. So let the red states do it their way. But let them do it.

UPDATE: Health law expert Nicholas Bagley delves deep into what might induce HHS to accept or reject a Section 1332 waiver plan here.  I interviewed Michael Leavitt on state-level innovation here, and Raymond Scheppach, longtime director of the National Governors Association, here.

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