- The Washington Times - Thursday, November 26, 2015

President Obama faces a major decision on Obamacare over the next year as states begin to apply for waivers to the sweeping law, pressuring the administration to either welcome or resist experimentation with his top domestic achievement.

The Affordable Care Act’s waivers start in 2017, and were designed to let states keep Obamacare money while ditching some of the law’s mandates and benefit rules as they try to find better ways of insuring their residents than the top-down approach in place right now.

With applications due to the Treasury and Health and Human Services departments beginning in the middle of next year, Mr. Obama will play a major role in deciding how much leeway he’ll allow states eager to experiment.

Hawaii is poised to act first, drafting a plan that would try to get back to the state’s robust job-based system, which it says had decades of proven success. In Massachusetts, meanwhile, officials want to reconcile Obamacare with the reforms the state pioneered under then-Gov. Mitt Romney, which imposed an individual mandate on residents years before the federal law.

And Arkansas, which two years ago engineered a new way expanding Medicaid under Obamacare, now may try to test the broader law. A health care pioneer in Little Rock says the waiver program offers a chance to move able-bodied people away from entitlement programs and into the private, “consumer-driven” insurance market.

“Why would you not?” said Sen. David Sanders, the Republican leading the effort. “It’s the part of Obamacare that lets you waive Obamacare.”

Formally known as a “Section 1332 waiver,” the provision was designed to let states act as laboratories for health reform. Waivers would last five years and could be renewed, but would have to get approval from the administration.

But states, who would have to apply by mid-2016 to be vetted in time for 2017, say HHS hasn’t issued specific guidance on what states can and cannot do under the program.

“If states have a plan they would like to discuss, we’ll work with them. We’ll update the guidance as needed,” said Aaron Albright, a spokesman for the Centers for Medicare and Medicaid Services.

For now, states are relying on limited information about what’s in-bounds and what’s not. They can waive specific parts of the law, including the insurance mandates on individuals and employers.

But states cannot let insurers turn away customers with pre-existing medical conditions, or run afoul of four so-called guardrails: the new model must cover at least as many people as Obamacare, provide coverage that’s just as comprehensive as what consumers found on the exchanges, curb out-of-pocket spending in line with the exchange model and not increase the federal deficit.

“They haven’t really addressed the substance of it,” said Timothy Jost, a law professor at Washington and Lee University in Virginia who closely tracks the health law. “This is an important issue, and if they have no final rules in place, and there’s just guidance, that can very easily be changed by a future administration.”

Sen. Ron Wyden, the Oregon Democrat who authored the waiver provision, asked HHS last week to update him on where things stand. He wants to know if specific reforms sound promising, how the program might work alongside waivers granted under Medicaid and if safeguards are in place to check states who might undermine Obamacare.

“The law must be used to move forward, not back,” he wrote to HHS Secretary Sylvia Mathews Burwell.

Hawaii is the only state so far to propose a waiver that can be submitted to the Obama administration next year, making it a test case for how the program’s guardrails will be applied.

The draft, published in September, says a 1974 law informally known as “Prepaid” goes further than Obamacare’s rules on employers. Hawaii requires any business with one permanent worker to purchase health coverage — not just large employers — and defines full-time work as 20 hours instead of Obamacare’s 30, so it would just as soon waive the Small Business Options Program (SHOP) to cut costs and avoid confusion.

“In their view, the ACA was kind of watering down provisions that were already in place and had been working well,” said Jennifer Tolbert, director of state health reform at the nonpartisan Kaiser Family Foundation.

The administration said it has no comment on Hawaii’s proposal, as its still up for public comment at the state level.

Analysts said it’s not surprising to see blue states that embraced Obamacare take the first steps to draft a waiver, since that what its framers envisioned.

Massachusetts, which wrote the template for Obamacare with its 2006 state health law, is considering a series of technical changes, such as making it easier for employers to report whether they provide adequate health coverage.

A health care task force in Minnesota said it’s looking at ways to pay for populations that bounce between programs, such as from the state Medicaid program to private plans on the state’s Obamacare exchanges, known as MNSure.

Red states, meanwhile, face practical and political hurdles. Their goals for reform often don’t comport with Obamacare, and it might not be worth expending political capital on health reform before they know if a Republican or Democrat will take the White House.

“I think a lot of states are waiting to see what the presidential campaign looks like, and who will win, before they go too aggressively,” said Stuart Butler, a conservative thinker and senior fellow at the Brookings Institution.

Some conservatives say the waiver program offers false hope, and that full repeal of the 2010 law is the only path forward.

Still others see it as a sound plan B, saying it makes sense to plan instead of waiting on Capitol Hill Republicans who’ve yet to vote on a comprehensive alternative to Obamacare.

In 2013, Arkansas found a way to place newly eligible Medicaid recipients into Obamacare’s private-plan exchange, while paying for it with an influx of federal funds that most states had used to expand their traditional Medicaid programs.

Now Mr. Sanders wants to go further, revamping Medicaid so that the able-bodied poor are treated as regular exchange customers — leading to a more robust, consumer-driven marketplace — and sicker patients on a managed-care track that’s tailored to individual needs.

“I think there’s room, even with this administration, to get where we want to go,” he said.

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