Health Care

Trump Can Give States Another Shot at Fixing the ACA

State innovation waivers are still one of the administration’s best options.

According to a new poll from the Kaiser Family Foundation, most Americans don’t realize that the Affordable Care Act’s individual mandate was repealed in last year’s tax bill — and even fewer know that the law won’t officially come off the books until next year. Confusion surrounding the mandate’s repeal only added to the surprise when Ohio asked the Trump administration for permission to formally waive the mandate a year ahead of schedule.

If granted, the waiver could make health insurance more affordable for the state — but the potential impact of the administration’s decision is much broader. By applying for this waiver, Ohio has brought an important but neglected vehicle for reform back into the spotlight. No matter how it responds, the Trump administration is going to change the way we approach health-care reform in the coming years.

Under Section 1332 of the Affordable Care Act, states can apply to waive many of the law’s costliest and most burdensome provisions — including the individual mandate — in exchange for a block grant of funding. To get approved, states must demonstrate that their waiver will not increase the cost or decrease the scope of coverage, and that it will not increase the federal deficit. In theory, as long as these criteria are met, states are free to design innovative policy solutions tailored to their particular needs.

Unfortunately, the road to state innovation has been a bumpy one. A full year before states were eligible to apply for 1332 waivers, the Obama administration issued guidance that made the deficit-neutrality requirement for waivers practically impossible to meet, preemptively sabotaging potential innovation. At the time, conservatives consoled themselves with the hope that a more sympathetic administration could roll back the guidance in the future.

The Trump administration’s initial actions on this front were promising: Soon after taking office, former Secretary of Health and Human Services Tom Price sent a letter to the nation’s governors encouraging them to submit waiver applications. Alaska received approval for their waiver application, allowing them to create a reinsurance fund that stopped insurers in the state from drastically hiking premiums.

For a brief window, the tide appeared to be turning — and then it stopped. The Centers for Medicare and Medicaid Services (CMS) took so long to respond to Oklahoma’s application that the state withdrew its request; Iowa followed suit, after it was revealed that President Trump had told CMS administrator Seema Verma to kill its application. HHS never rolled back the Obama-era guidance, which is still on the books today. With the defeat of the Alexander-Murray bill, which relied heavily on waivers to stabilize the ACA, state innovation as a way to improve the ACA seemed to have breathed its last breath.

The Trump administration should use Ohio’s waiver application as a chance to correct its previous course of action and put us back on the path to reform. Most observers assumed the administration’s resistance to waivers stemmed from its attempts to sabotage, not improve, the ACA. Whether or not this was their intention is now irrelevant: The latest numbers show that ACA enrollment this year was about the same as last year. Paradoxically, the president’s decision to cut off the ACA’s insurer subsidies (which everyone assumed would drive up premiums) has lowered patients’ out-of-pocket costs, effectively making exchange plans cheaper than before.

The Democratic party is clearly planning to implement some form of a national single-payer system as soon as it’s able.

Approving Ohio’s waiver would send a clear message that the administration is just as committed to stabilizing the ACA as are the states, who in reality have never given up the fight. Idaho’s recent attempt to sell stripped-down insurance plans that don’t adhere to the ACA’s mandates was basically an attempt at a waiver by other means. Meanwhile, state waivers for Medicaid have been flourishing: At least ten states have submitted requests to implement some kind of eligibility requirement after Kentucky’s request to implement work requirements for Medicaid was approved. States want to tinker with the law and have no shortage of ideas on how to do that. They should be encouraged.

Of course, not every waiver proposal will be in line with the administration’s priorities, and that’s okay, too. Federalism is what makes 1332 waivers so appealing — Kentucky can pursue work requirements while California pursues single payer, without either imposing its designs on the other. This is not to say that the veil of federalism makes every potential waiver okay. Quite the contrary: Single-payer health care is a disastrous idea, something my colleague Chris Pope has convincingly demonstrated time and again. It is precisely because single-payer is so terrible, however, that the administration should allow states to pursue it.

Whether in the form of Bernie Sanders’s vacuous Medicare for All or the Center for American Progress’s Medicare Extra for All, the Democratic party is clearly planning to implement some form of a national single-payer system as soon as it’s able. That plan would fail in the U.S. — just as it has in Canada and the U.K. — because of the long wait times, subpar care, and astronomical administrative costs that would inevitably accompany it. In an ideal world, no such experiment would be undertaken on American soil. Failing that, the second-best option is to allow a progressive state to indulge the single-payer fantasy — and reveal to the rest of the nation how unworkable such programs are.

State innovation waivers are still one of the best options available to fix the ACA. Rather than letting them fizzle out, the Trump administration should encourage states to propose innovative policy solutions, and stand with them as a partner on this crucial path to reform.

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