A Case for Addressing the Coverage Crisis with 1332 Waivers
In 1979, Jimmy Carter declared our nation was suffering from a crisis of confidence. COVID-19 has plunged us into a different sort of crisis—one of coverage. Of the tens of millions of Americans now unemployed due to the pandemic, anywhere between 5.5 million and 12 million have lost their employer-sponsored health insurance along with their job.
The pandemic makes it exceptionally clear that the time has come to decouple healthcare coverage from employment and to ensure that coverage dollars follow an individual regardless of their employment status. There is a way for state policymakers to do just that: State Relief and Empowerment Waivers, otherwise known as 1332 Waivers (as they were written into Section 1332 of the Affordable Care Act), allow states to waive specified ACA requirements, granted a suitable alternate plan is proposed to provide health insurance to residents.
The waivers were made available to states in 2017, after being initially championed by Oregon Senator Ron Wyden. Alaska was the first to apply for one, allowing it to establish the Alaska Reinsurance Program. Since then, 14 other states have also been granted 1332 Waivers, overwhelmingly used thus far to deploy risk stabilization strategies. (Hawaii is the only state to receive federal approval for a 1332 Waiver not related to a reinsurance program.)
However, there are many ways a 1332
Waiver can be used to address the coverage crisis, making health insurance more accessible, affordable and portable—and that’s key here—for a state’s unique conditions and residents. Right now, employers generally choose their employees’ coverage because it works best for that company rather than the benefit it provides for an individual or family. Ideally, employees could select their own coverage, take it with them from job to job, and count on their employer to make a contribution to their preferred coverage.
1332 Waivers provide a number of ways to make this a reality—particularly if states consider an accountbased subsidy approach. 1332 Waivers could allow states to direct ACA subsidies in the form of passthrough funding for premium tax credits and the small business healthcare tax credit into consumerdirected healthcare accounts that pay for both health insurance premiums and out-of-pocket costs.
For instance, an employee could receive both a federal subsidy and an employer subsidy (which can be put into an individual coverage health reimbursement arrangement, or ICHRA), and the two subsidies could be combined to purchase their coverage. If that person later loses their job, they might lose the employer subsidy through the ICHRA but they wouldn’t have to change plans because their federal subsidy would grow bigger as a result. Or perhaps they could then be eligible for a second subsidy from the state. Plan design options are numerous.
By using portable health accounts in this way, more Americans would also be introduced to the value of saving for future health expenses—and at a time when most families cannot easily bear an unexpected expense of even a few hundred dollars. With a health savings account, individuals can begin down a consumer pathway that takes them from health spender to health saver and even to health investor— putting them in control of their health and financial health decisions.
The linchpin in all of this is financial management, as coverage dollars have to be managed in such a way that they can travel with an individual from job to job, or even in between jobs. Fortunately, we now have technology mature enough to easily support policy modifications like this. Stacked benefit cards, for instance—previously used to pay for things like commuter and childcare benefits—could be put to good use to simplify payment for benefits being
paid for from multiple purses.
1332 Waivers have opened the door for states to devise and pursue innovative strategies for providing their residents with access to health insurance they can count on. Just as reinsurance programs took off once Alaska rolled out theirs, I’m confident that it will only take one or two states to lead the way in using a 1332 Waiver to mitigate the coverage crisis in their own state. Then, we can expect many other states to follow suit, each putting their own spin on a plan that works best for its people.