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Manhattan Institute

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State Waivers: A Federalist Rx for Obamacare Ills

issue brief

State Waivers: A Federalist Rx for Obamacare Ills

February 1, 2017
Health PolicyAffordable Care Act

Executive Summary

The Trump administration and the majority Republican Congress have committed to repealing and replacing the Affordable Care Act (ACA). Part of their challenge during the transition will be dealing with the distortions that Obamacare has created and doubled down upon health insurance and, indeed, the entire health-care system.

Luckily, the ACA does have a provision that can enable states, in tandem with the federal government, to partially work through the transition while moving the country toward a health-care system that offers more choices and competition and is more affordable. Recent legislation proposals correctly expand upon this provision by putting states at the forefront of an ACA replacement strategy.

Key Findings

  • Section 1332 of the ACA provides for “state innovation waivers” that allow states to waive many elements of the law, including the individual mandate and the law’s subsidy structure.  
  • If a waiver is granted, a state receives essentially a block grant of funding that it otherwise would have received through the waived element(s). The catch: the state must provide at least equivalent financial protection to individuals, cover at least as many people as the ACA would, and be “deficit neutral.”
  • 1332 waivers alone cannot replace the ACA, but in tandem with parallel waiver provisions in the Medicaid program, they can help usher in a replacement that will rebalance state and federal government power.

READ FULL REPORT

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Yevgeniy Feyman is an adjunct fellow at the Manhattan Institute and a senior research assistant at the Department of Health Policy and Management at the Harvard School of Public Health. Previously, he was MI's deputy director of health policy. Follow him on Twitter here.

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