The Leaflet: States Empowered To Innovate In Health Care

Published October 26, 2018

On Monday, the Centers for Medicare and Medicaid Services (CMS) issued new guidance that would give states more freedom to reform their individual health insurance markets. Since the passage of Obamacare, the number of insurers has plummeted and premiums have skyrocketedThe new rule gives states more flexibility to implement reforms that will reduce health care costs and increase choice and competition, while maintaining consumer protections.  

Under Obama-era guidance, states could apply for Section 1332 State Innovation Waivers (SIW) from CMS. If approved, these waivers allowed states to enact several health care reforms. However, the old guidance limited the extent to which states could innovate by strictly interpreting Obamacare statutory guardrails. For example, states had to offer plans at least as comprehensive as would be without the waiver, offer premium and cost-sharing subsidies at least as affordable, maintain coverage to at least a comparable number of residents, and not increase the federal deficit.  

In the new guidance, CMS renames SIW as State Relief and Empowerment Waivers. The updated waivers will allow states to introduce innovative coverage options that meet the diverse needs of individuals and families. CMS will reinterpret existing guardrails in a broader manner and grant waivers that accomplish these five goalsProvide increased access to affordable private market coverage, encourage sustainable spending growth, foster state innovation, support and empower those in need, and promote consumer-driven healthcare.  

Finally, CMS will permit states to provide access to more insurance options at different price points and benefit levels. AdditionallyCMS may allow federal funds to subsidize the purchase of short-term, limited-duration insurance (STLDI) plans or association health plans (AHPon Obamacare exchanges 

The updated guidance comes a year after President Donald Trump issued an executive order to promote health care choice and competition. This year, the administration has issued new rules to expand eligibility for AHPs and reduce restrictions of STLDI plans. 

The Heartland Institute released a press release applauding the new guidance.  

Despite a growing need, increasing costs, and limited providers in dozens of state exchanges, Congress has been unwilling to pass meaningful reform to fix the ACA,” Senior Policy Analyst Matthew Glans wrote. “Fortunately for state policymakers, there is an option available to them to retake control of their health care markets, the waiver processWith this new guidance from [CMS] and the Trump Administration, the training wheels are finally off and states can pursue the kind of systemic reforms that they need to lower the cost of health care and return real choice to consumers.” 


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