How to Use Section 1332 to Create an Alternate Health Insurance System for your State

Using a Sec. 1332. Waiver for State innovation states can create their own ACA alternative, including a state-based single payer system. Some states have already filed waivers and submitted Initiatives (see below). Measures can be voted on in the next voting cycle, with programs enacted as early as 2017 (this process then continues each year, so if you didn’t get a measure on the general, keep in mind off-year and mid-term elections!)

Using this method, anyone can help create:

  • A state-based single payer program.
  • A state-based public option.
  • Another state-based alternative that meets ACA standards like a voucher program.
  • A more robust ACA compliant Medicaid program (either expanding the program via the ACA or transforming it via Sec. 115 waivers).
  • And more!

TIP: For more information on how you can affect state-legislation see Initiatives and referendums in the United States.

How the ACA Can Lead to State-Based Single Payer, a Public Option, and Better Medicaid Programs

Some claim that the Affordable Care Act won’t lead to single payer universal healthcare, but this can be shown to be untrue by considering Medicaid expansion and transformation via Sec. 1115 waivers (from the Social Security Act) and Marketplace alternative Sec. 1332 waivers (from the Affordable Care Act).

Utilizing Medicaid expansion and the state-based waivers could theoretically work even better than just expanding to single payer on a Federal level in the long run. Using the provisions contained in the ACA since day 1, states get the right to choose a program that works for them, and the state programs can work as models for a future federal program (similar to how it worked with Massachusetts and “Romney Care”).

Medicaid Transformation Demonstration Waiver 101

Sec 1332 ObamaCare State Opt out. A conservative take on what 1332 can be used for. They are very right, states can use this to set up an acceptable alternative plan that shows off the merits of conservative ideology without sacrificing coverage or cost. In theory, a centered state could create single payer for premiums, and say, voucher-based cost sharing with an option to fund an HSA.

The Rules for Creating a State-Based Health Insurance Alternative

The main rules for creating a state-based coverage alternative is that coverage quality and the number covered must be comparable to the current ACA standards, and the program can’t add to the federal deficit. It can also only replace private coverage and not public programs like Medicaid. Any state that wishes to modify its Medicaid program must seek permission using a separate section 1115 waiver. See specifics here.

This means, states that are up for it could technically create a ACA and Medicaid replacement using, at least in-part, Federal funding already provided via programs (such as the WA plan noted below does).

Examples of Single Payer Healthcare Initiatives

Below are three examples of single-payer healthcare alternatives. It should be noted that Section 1332 allows for non-single payer alternatives that meet ACA standards.

  • On September 9, 2015, Hawaii was the first state to draft a potential Section 1332 waiver and posted it for public comment.
  • See Initiative Measure No. 1516, filed March 24, 2016 in Washington state for an example of a state-based single payer plan. This plan opts to combine Medicaid and Marketplace plans into one single payer solution with no deductibles or premiums, but in trade presents rather high payroll and income tax hikes. A more conservative plan might simply expand Medicaid, keep deductibles, offer cost sharing, and aim to reduce state-based taxes. Some things to consider are: how and if current federal taxes associated with the ACA are replaced under the plan, and looking at alternative tax revenue that may be able to be used to fund healthcare.
  • See Colorado State Health Care System Initiative, Amendment 69 (AKA ColoradoCare) for another look at a state-based single payer initiative on the ballots in 2016. This plan utilizes more varied tax options, pinning a “premium tax” to a wide range of tax types rather than focusing on income and payroll taxes only (although it does include a really painful 10% payroll tax). This measure, being the most likely of all the measures to pass, is being opposed as you might imagine: See Health Care Industry Moves Swiftly to Stop Colorado’s “Single Payer” Ballot Measure. With this in mind, states may want to consider embracing some conservative ideas to keep costs down while showing that a single payer option can be cost effective, not just for those with middle and lower incomes, but for businesses and business owners in the community too.

TIP: We strongly support single payer, but one reason is due to the cost saving potential. The single payer plans have been admirable, but it is a little frustrating to see them all start from a position of creating taxes (which in turn create opposition) rather than focusing on how money already being spent can be better managed by a state-organized group fund and then requesting minimal and fair tax increases to support that.

Exploring “ColoradoCare,” Single-Payer in Colorado. A balanced look from the for and against side.

SB 2775 Relating to the Affordable Care Act Section 1332 State Innovation Waiver.

More Details

You can see the process you need to go through to file a waiver and create a program at CMS here: SECTION 1332: STATE INNOVATION WAIVERS.

“States have the option to seek a State Innovation Waiver under Section 1332 of the Affordable Care Act to pursue innovative strategies to provide high quality, affordable health care coverage while retaining the statute’s basic protections. The U.S. Department of Health and Human Services (HHS) and the U.S. Department of the Treasury are responsible for reviewing waiver applications.

States may submit State Innovation Waiver applications to stateinnovationwaivers@cms.hhs.gov.”

Read more from Harvard School of Public Health: ACA waiver could be a ‘game-changer’.

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Helen R Okamoto on

I think it’s great. I recieved my SSA disability 5 years ago in Grand Rapids, MI. Medicade. I recently turned 62 in June. Although I applied for SSI combination of mine and my ex husbands, I will be applying for a medical insurance program. I still need to apply for SSI disability, but I now am in a 3 year gap, until I turn 65…Thank you President Obama for the ACA, and thank you State of Michigan…