On Monday, while addressing the nation’s Governors, President Obama endorsed bipartisan legislation introduced by Senators Wyden, Brown and Landrieu that moves up the date that states can apply for so-called “State Innovation Waivers” from 2017 to 2014.

Waivers come in many shapes and sizes and can be quite confusing. (Just watch Members of the House Energy and Commerce Health Subcommittee try to wrap their heads around waivers at today’s hearing if you need any convincing on that fact.) So the first point that needs to be made is that this is no “fait accompli”.  Congress would have to enact legislation to amend the Affordable Care Act to change the date of when these waivers would become available. We don’t know exactly how the Congressional Budget Office would score this, but The New York Times quoted a figure of $4 billion – not an insubstantial figure. And given that the House of Representatives seems focused on a course of repeal not amend, it seems hard to imagine them coming up with any money to make a change that many House leaders would reject as meaningless anyway.

What are State Innovation Waivers? State Innovations Waivers are a new, and at this point theoretical, option.  They were created by the Affordable Care Act and currently the statute states that they would not become available until 2017. State Innovation Waivers are not Medicaid and CHIP waivers but rather an opportunity for states to request a waiver of provisions of the new law related to exchanges, benefits and cost-sharing protections. A state could apply for this new waiver through a coordinated process with a Section 1115 Medicaid and/or CHIP waiver thus marrying the two into a “super waiver” proposal – hence some of the confusion.  But otherwise, the Wyden-Brown-Landrieu legislation really doesn’t impact the current Section 1115 Medicaid and CHIP waiver process.

Here is how a fact sheet from the White House accompanying the President’s remarks describes State Innovation Waivers:

Under the Affordable Care Act, State Innovation Waivers allow States to propose and test alternative ways to meet the shared goals of making health insurance affordable and accessible to all Americans, including those living with pre-existing conditions.  Specifically, State Innovation Waivers are designed to allow States to implement policies that differ from the new law so long as they:

  •  Provide coverage that is at least as comprehensive as the coverage offered through Exchanges – a new competitive, private health insurance marketplace.
  •  Make coverage at least as affordable as it would have been through the Exchanges.
  • Provide coverage to at least as many residents as the Affordable Care Act would have provided.
  • Do not increase the Federal deficit.

The fact sheet goes on to say that the law also allows States to submit a single application that includes Medicaid waiver requests which could, for example, seek to give people eligible for Medicaid the choice of enrolling in Exchange plans. This line may have caused more  confusion because the Heritage Foundation, among others, has called for states to be allowed to move Medicaid beneficiaries into the exchange, receive federal tax credits in lieu of being Medicaid beneficiaries. But I don’t think the Affordable Care Act allows that. What this statement means to me is that a state could choose to use exchange plans as a delivery system for Medicaid as long as Medicaid beneficiaries continued to receive the benefits and the cost-sharing protections for which they are eligible (in other words, as long as they remain Medicaid beneficiaries).

So the next step is to see whether Congress takes up this proposal.