Federal rules governing Section 1332 waiver approvals under the Affordable Care Act may dissuade states from applying for the program, according to a government watchdog report.
The U.S. Government Accountability Office said stakeholder groups have warned that there will likely be fewer section 1332 waiver requests in 2016 because of application review controls and other considerations.
Starting Jan. 1, 2017, states can request waivers for virtually every coverage component of the Affordable Care Act as long as the state's healthcare coverage is consistent with ACA terms and doesn't increase the federal deficit.
But HHS and the Treasury Department issued rules and guidance preventing states from using savings from other federal waivers—like Medicaid waivers—to justify their 1332 applications, and groups have told the GAO that could “considerably limit” the number of requests.
“Representatives told us that states may be concerned that such proposals may not be able to meet the deficit neutrality criteria for the 1332 waiver independently of the Medicaid waiver,” the GAO report said.
A handful of state legislatures have moved to pursue 1332 waivers, but so far only Vermont has formally requested one. In March, the state asked to dodge the ACA's small-business exchange provision in favor of allowing small businesses to work directly with insurers. The state's application is under review.
The GAO said Hawaii is seeking public comment on its own 1332 waiver application, a necessary step before submitting the request to HHS and Treasury.
Both states have said the exchanges may be too complex and expensive for their small-business markets.
In a letter to the Senate Finance Committee introducing the report, the GAO said HHS and the Treasury Department have created a number of controls to ensure approved waivers met the program's requirements. However, the federal watchdog couldn't analyze the application of that criteria, since a waiver has yet to be approved.
