1332 waiver

What is a 1332 waiver?

Section 1332 of the ACA allows states to be innovative in their approach to healthcare reform by obtaining 1332 waivers from the federal government. States can propose unique, state-specific solutions – which can include fairly substantial changes in terms of how the Affordable Care Act is implemented in the state – as long as consumer protections are maintained, people don’t lose coverage, and the federal government doesn’t have to spend any more than they would have without the state’s innovation.

What determines whether a 1332 waiver will be approved?

In order to be approved, a state’s 1332 waiver proposal must ensure that:

• Residents will have access to health insurance coverage that is at least as comprehensive as it would be without the waiver.
• Premiums and cost sharing have to be at least as affordable as they would be without the waiver.
• At least as many people have to be covered under the state’s new approach as would be covered without the waiver.
• The state’s approach cannot result in increased federal spending.

In 2018, the Trump administration issued new regulations pertaining to 1332 waivers, with a more lenient approach to the guardrails that the ACA created. The administration also published an overview of waiver concepts that states could potentially utilize.

With the exception of Georgia, states expressed little interest in new 1332 waiver guidelines. And HHS rescinded them in rules that were finalized for 2022.

How does a state apply for a 1332 waiver?

To apply for a 1332 waiver, a state has to submit a proposal to CMS, with detailed explanations of what ACA provisions they wish to waive, how the state-specific program will be implemented, the proposed budget, and how the program will meet the four basic guidelines described above.

Which states have had 1332 waivers approved?

CMS has a web page where you can see details about the states that have submitted 1332 waivers, and the status of those proposals. As of late 2022, waivers have been approved for 19 states, mostly for reinsurance programs:

• Hawaii (eliminate SHOP exchange, effective in 2017)
• Alaska (reinsurance, effective in 2017)
• Minnesota (reinsurance, effective in 2018)
• Oregon (reinsurance, effective in 2018)
• Wisconsin (reinsurance, effective in 2019)
• Maine (reinsurance, effective in 2018)
• Maryland (reinsurance, effective in 2019)
• New Jersey (reinsurance, effective in 2019)
• North Dakota (reinsurance, effective in 2020)
• Montana (reinsurance, effective in 2020)
• Delaware (reinsurance, effective in 2020)
• Colorado (reinsurance, effective in 2020)
• Rhode Island (reinsurance, effective in 2020)
• Pennsylvania (reinsurance, effective in 2021)
• New Hampshire (reinsurance, effective in 2021)
• Georgia (reinsurance, effective in 2022, and elimination of the state’s exchange in 2023; the latter was suspended by the Biden administration, so Georgia still uses the federally-run health insurance exchange)
• Virginia (reinsurance, effective in 2023)
• Idaho (reinsurance, effective in 2023)
• Washington (will allow undocumented immigrants to use the state’s exchange as of 2024; they will be eligible for state-funded subsidies, but not federal subsidies)

How are states utilizing 1332 waivers?

Most of the 1332 waivers that states have submitted thus far have been to implement reinsurance programs to stabilize states’ individual markets. Reinsurance reduces premiums, which means premium subsidies are smaller. The states that have created reinsurance programs have used the 1332 waivers in order to recapture the money that the federal government would otherwise have saved as a result of smaller premium subsidies. The states then get to use this “pass-through” funding to cover most of the cost of the reinsurance program. Without a 1332 waiver, the federal government would simply keep the savings.