Spring promises of partnership on health-care reform are growing cold for states

In March, the Trump administration announced new plans for state flexibility on health-care waivers for both Medicaid and state innovation 1332 waivers found in the Affordable Care Act. Recently, states have found this promised flexibility is not becoming a reality for either innovation or Medicaid waivers. If the Trump administration wants to fulfill the promise made earlier this year, then they need to send a strong signal to states that they indeed have a willing partner in Washington.

A letter, from then Health and Human Services Secretary, Tom Price to state governors, said the administration was “seeking to provide more flexibility and opportunities for innovation on the state level.” The letter outlined ways that states could use a Section 1332 waiver to lower premiums on the individual market through a high-risk pool. Later that spring, HHS published a checklist to help states prepare and file compliant 1332 waivers.

{mosads}As a result, states responded; and several state’s waiver applications included the creation of a high-risk pool. Other states, like Oklahoma and then Iowa, went even further seeking to utilize 1332s to escape some of the constraints of the Affordable Care Act. Twenty-four states have seriously explored using a 1332 waiver to improve their health-care systems.

The momentum for state flexibility grew as Alaska’s 1332 waiver was officially approved. Other states continued to file reinsurance waivers and hoped for an expedited review before open enrollment started.

States stressed the need for timeliness from HHS and cited the Trump administration’s public positions on innovation and partnership to ameliorate harm from the Affordable Care Act. States like Arkansas publicly embraced congressional legislation that would have empowered states by using block grants to fund Medicaid and other public health spending as well as pursuing waivers.

In September, Iowa’s bold 1332 plan was certified by HHS as being officially submitted, and Iowa officials were optimistic that HHS would work with them. Just weeks later, Iowa withdrew its waiver application citing the inflexibility of the waiver process.

Oklahoma also withdrew its waiver application again citing frustration with federal officials and the lack of timely support from HHS. Another state, Massachusetts, recently had a waiver denied by HHS and states are now dubious of the ability of 1332 to affect change.

States are frustrated that the waivers requested on an expedited basis were slow in receiving approval or feedback from HHS. As a consequence, many have not been able to implement solutions that would help improve access to health care before this year’s open enrollment period.

The spring promises of flexibility and openness now feel like business as usual in Washington, where states who propose and try innovative solutions are rejected by federal officials. It is common for states to have bold waiver ideas rejected by Washington, but many states had hoped for a different attitude from the new president.

It is not too late for the administration to revisit and live up to its promised flexibility of the spring. If HHS truly does want innovation from the states, it needs to send a strong signal to counteract the recent disappointments from the waiver process.

A strong signal could include withdrawing and then revising the Obama-era 1332 guidance, approving a strong Medicaid waiver with work requirements, implementing a Medicaid expansion freeze, or implementing a change in expansion eligibility such as an Arkansas waiver proposal.  

States are still in need of the freedom to design their Medicaid and health insurance markets to best meet the needs of their citizens, and many congressional proposals want to expand on this flexibility. Initially the Trump administration promised flexibility, but states are waiting to see a strong show of action that it is a new day in Washington. Without such a signal, states will tinker around the edges and Washington will continue to centralize more power on health care.

Rea S. Hederman Jr. is executive vice president of the Buckeye Institute and an expert in health-care policy.