According to the Centers for Medicare and Medicaid Services (CMS), “Section 1332 of the Affordable Care Act (ACA) permits a state to apply for a State Innovation Waiver to pursue innovative strategies for providing their residents with access to high quality, affordable health insurance while retaining the basic protections of the ACA.” (here)

CMS provides a very detailed application process for states, with the timeline of beginning these new state programs in 2017.

Even today, six years after the passage of Obamacare, some officials and health care policy workers view 1332 waivers as a method to either expand or to roll back the ACA. However, the language of the law is very clear about what can and can not be included in the waiver. Again quoting from the CMS website, “state Innovation Waivers allow states to implement innovative ways to provide access to quality health care that is at least as comprehensive and affordable as would be provided absent the waiver, provides coverage to a comparable number of residents of the state as would be provided coverage absent a waiver, and does not increase the federal deficit.”

Some proponents of the ACA see the waivers as a means to achieve a single-payer, government-controlled health care delivery system. Citizens in Colorado, for example, will vote this November on a state-wide single-payer system designed under a 1332 waiver. (here) Secretary Clinton and President Obama have both proposed a taxpayer supported “public option” to compete with private insurance companies in the Obamacare exchanges. (here) Theoretically, these would be allowed under a 1332 waiver.

The reality is that these proposals would not be revenue neutral and like any massive government spending program would have the potential to add to the federal deficit. Two other scenarios are possible - state taxes would increase to an unacceptable level or funding would be capped and health care would be severely rationed.

Opponents of the ACA initially saw 1332 waivers as a means to circumvent the ACA. However, the law requires that a waiver must “…provide access to quality health care that is at least as comprehensive and affordable as would be provided absent the waiver, provides coverage to a comparable number of residents of the state as would be provided coverage absent a waiver...” Consequently, 1332 waivers must include the benefit mandates, the pre-existing conditions and community rating clauses and some type of individual mandate required in the ACA.

Theoretically, states should always be laboratories for new policy innovations. Unfortunately, 1332 waivers represent more federal regulations, more bureaucratic complexity and more expense to federal and state taxpayers.