In a matter of two weeks, everything seems to have changed for the fate of states and their healthcare. Prior to President Trump’s decision to keep the Affordable Care Act (ACA) – following the withdrawal of the House vote on the American Health Care Act (AHCA) – states were already urged to take their healthcare into their own hands.
The U.S. Department of Health and Human Services (HHS) issued letters encouraging states to use IRS Section 1332 waivers to implement their own healthcare systems that met certain ACA requirements. Some states introduced legislation in anticipation of the repeal of the ACA and the employer mandate.
States like Massachusetts proposed their own version of an employer mandate, typically known as “play or pay” laws. The Massachusetts proposal requires employers with 11 or more full-time equivalent employees to offer its full-time employees a minimum of $4,950 toward the cost of employer-sponsored health plans or an annual contribution in lieu of coverage of $2,000 per full-time equivalent employee. This would alleviate the costs associated with increased enrollment in MassHealth, the state’s Medicaid and Children’s Health Insurance Program.
Other states like California, Wisconsin, Illinois, and Pennsylvania were investigating single-payer bills, while almost half of the states in the country were considering systems where employers would carry a significant amount of healthcare costs. Despite the HHS circulating letters encouraging governors to partake in the Section 1332 waiver, all is not as easy as it seems.
Criteria for formulating a state-run healthcare system is complex, with coverage that must be comparable to what the ACA already offers within their metal-rated options (bronze, silver, etc.). Other criteria include the same quantifiable coverage of individuals under the ACA, a cap on out-of-pocket spending, and changes that will not raise the country’s existing federal deficit. States are still urged to file waivers, despite only an existing few being filed and even fewer greenlit.
While Trump’s AHCA plan was eager to give states a significant amount of power, this may all change now that the ACA remains. Should the AHCA, or TrumpCare, have been passed, states would have encountered increasing complexities since the bill urged more separation than unity on a state-by-state basis. For those states seeking more healthcare autonomy through play or pay laws, now may not be the time to get that started. States considering a Section 1332 waiver should be mindful of the complexities involved and move forward with caution.
