States have long been recognized as incubators for new policy models, and health policy is no exception. We have seen a multitude of approaches to health insurance and delivery taken up by states after the passage of the Affordable Care Act (ACA). States have chosen to create their own exchanges, defaulted to the federal exchange, or opted for a middle ground with state partnership and federally supported exchanges.
Similarly, states have taken different approaches to Medicaid expansion, either fully expanding coverage to people with income below the eligibility level or refusing to expand Medicaid. As a middle ground, some states have expanded Medicaid but added their own twist, often requiring minimal cost-sharing or premiums, or insuring eligible Medicaid beneficiaries through “private-option” insurance.
With the ACA on more solid ground after the Supreme Court’s decision in King v. Burwell, we expect these state-specific approaches to health insurance to continue and even grow in number. One factor spurring growth is the looming 2017 effective date for State Innovation Waivers, also known as “1332 waivers” or “Wyden waivers.”
These waivers provide a pathway for states to request that the federal government waive nearly every component of the ACA, as long as the end result will be comparable comprehensiveness, affordability, and scope of coverage at no increased cost to the federal government.
The 1332 Waivers Provision
The 1332 waivers provision was derived from the health reform legislation of Senator Ron Wyden (D, Oregon), the Healthy Americans Act, introduced in 2007 and 2009. The provision was included in the enacted ACA, but waivers were not permitted to go into effect until 2017. Initial regulations on the 1332 waivers were published in 2012. In July 2015, the Centers for Medicare & Medicaid Services released new guidance relevant to the 1332 waivers for states seeking to test innovations in healthcare coverage approaches.
Activity has been heating up in several states as they consider submission of applications based on the 1332 waiver. An approved waiver would go into effect no earlier than January 1, 2017, and would be effective for 5 years, with the opportunity to apply for renewal. Potentially, waived provisions of the ACA include issues such as the individual and the employer mandate, rules that govern cost-sharing and premium subsidies, essential health benefits, and qualified health plan certification. States that are considering waiver applications must comply with public notice requirements and have sufficient state authority through new legislation or through existing law before submission of their application.
Several states have begun considering 1332 waiver applications, including Arkansas, California, Hawaii, Minnesota, New Mexico, Rhode Island, and Vermont. As expected, state approaches vary greatly. Vermont considered, but has since found too costly, a waiver to implement a single-payer system. States that have defaulted to the federal exchange may choose to submit a 1332 waiver application to provide subsidies for insurance cost-sharing for plans that are not meeting the marketplace requirements, enabling increased carrier participation in the exchange.
Other states are using 1332 waivers to spur discussion, establishing task forces to evaluate options to improve individual health insurance. States that expanded Medicaid coverage through a “private option”—providing eligible beneficiaries with subsidies to purchase exchange plans—may consider coordinating Medicaid expansion and exchange requirements through a 1332 waiver application.
Implications for Cancer Care
Clearly, a multitude of approaches to individual health insurance market coverage are possible with the 1332 waivers. However, what are the potential impacts for cancer care providers and their patients? The greatest concerns may be network adequacy and prescription drug access.
Effective cancer care so often depends on the expertise of subspecialists who focus on a specific cancer type. Patients with cancer may choose health plans based on their in-network inclusion of an oncologist who is highly knowledgeable about their specific cancer type. However, should a state pursue a single-payer option through a 1332 waiver, network choice may be severely limited.
States using an expanded private option, providing for the purchase of any number of individual health plans, would ensure a broader range of choice in provider networks. However, inclusion of plans that do not provide essential health benefits may lead to the conundrum of inadequate coverage for cancer care services.
Likewise, any waiver of ACA cost-sharing requirements threatens the ability of patients with cancer to access and afford necessary prescription drugs. Although states may provide subsidies to compensate for increased cost-sharing obligations, it is unclear whether this would fully protect patients from increased cost burdens.
Timing and amount of subsidies may be causes for concern for patients with cancer who have high upfront out-of-pocket drug costs. Conversely, states that consider a single-payer system may limit all insured to a single prescription drug formulary. For patients with cancer who rely on particular drugs, this lack of choice could be quite detrimental to their health and finances.
The Association of Community Cancer Centers will watch carefully as states continue to explore the 1332 waivers. Participation in state public forums and input during state legislative consideration will be important to ensure that any state innovation adequately provides for the care of patients with cancer.