The GOP's New Obamacare Repeal Deal Would Give States More Choice—But Only With Federal Permission

A tentative deal would provide some regulatory wiggle room, but would preserve key elements of Obamacare.


Jeff Malet Photography/Newscom

After a months-long standoff, conservative and moderate GOP factions may be nearing an agreement on measure to partially repeal and replace Obamacare.

The apparent deal, which still may not have enough support to push through the House, is likely to be portrayed by supporters as a compromise that allows states to decide on their own approach to health policy. But the terms make it look less a negotiated compromise than an agreement to let individual states work out the differences between the two groups via a waiver process that is managed by the federal government.

The core idea of the agreement, as reported by The Huffington Post, is to allow states to opt out of two key provisions in Obamacare: the Essential Health Benefits (EHB) rules, which require insurers to offer certain categories of coverage with all plans, and some of the community rating rules, which restrict how insurers can charge based on individual health history. Insurers would still be prohibited from pricing based on gender, and would only be allowed to charge based on health history in states that established high-risk pools.

But states would not be simply allowed to choose for themselves whether or not to opt out. Instead, they would have to apply for approval from the government, which would have to grant a "Limited Waiver." States would be required to show, or at least claim, that their waivers would allow them to reduce insurance premiums, increase coverage, or "advance another benefit to the public interest in the state," according to a summary of the agreement posted by Politico.

States, in other words, would have to rely on the waiver process set up by federal government in order to opt-out. Which means that the permissiveness and flexibility of that process is an important factor.

State waivers for health care policy are not a new idea—and in many cases, the process has been rather onerous for states. Obamacare, for example, included a provision allowing states to apply to opt out of certain requirements through Section 1332 of the law. But 1332 waivers are a heavy lift for states, requiring lengthy public comment periods and review by federal health officials, as well as certification that coverage will remain both as widespread and as generous as under Obamacare. It also limits which provisions the federal government can waive. It sets a regulatory floor that basically leaves states with the option to pursue something like a single-payer system, as in Vermont.

The federal government also grants waivers to states seeking to alter their Medicaid programs. But as Jonathan Ingram, Nic Horton, and Josh Archambault wrote last year in Health Affairs, "States frequently comment on the frustrating, time consuming, and seemingly 'corrupt and opaque' process of the Medicaid Section 1115 waiver route." Those waivers take nearly a year on average to process. The authors also suggested that Obamacare's 1332 waiver process, which the law timed to start in 2017, could be even more onerous.

So while waivers have traditionally offered states more flexibility than they would have had if no process existed at all, they have tended to rely heavily on negotiation with the federal government. State choice is dependent on the whims of the administration.

The Trump administration has signalled that it is open to state waiver requests. Seema Verma, who was recently selected to head of the Centers for Medicare and Medicaid Services (CMS), which approves the waivers, negotiated a waiver to expanded Medicaid through Obamacare in Indiana, under then-governor Mike Pence. Last month, Verma sent a letter to states asking them to put in waiver requests. The House GOP agreement would probably make the waiver process easier for states—in particular by allowing the administration to waive Obamacare's essential health benefits and community rating rules.

But the administration would still be charged with granting or denying waivers. And a future administration that is less open to state flexibility might not be quite so inclined to play along with states. (This sort of legislation almost always leaves room for creative interpretation by the executive branch.) And it would do so in a bill that still awkwardly preserves many of the essential features of Obamacare at the federal level, from key insurance regulations to a more limited form of tax subsidy. At best, this would merely tweak the House GOP's original bill, with all its previous problems, to offer a bit of wiggle room to states that managed to obtain permission from the federal government.

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  1. They aren’t called “The Stupid Party” for nothing. They elect a big-government policy-wonk blue-dog Democrat as Speaker of the House, then get surprised when the legislature he pushes is complete crap.

  2. Opting out of the essential benefits list would be a major improvement. it would (presumably) make hospital-only coverage qualify to meet the individual mandate, which would mean young healthy people could buy those cheap $50/month plans they used to be able to get before the ACA. The rest of you can figure out the math on that.

    This would effectively gut the ACA for any state that wanted to opt out of it. Provided they got such a waiver. And leaving it up to the executive branch will be a recipe for wild shifts in policy with each new administrations.

    Still, I’ll call this “better than nothing”, unlike the last bill.

    1. $50 a month for something I never use is not “cheap”.

      1. It’s insurance. You’re not supposed to use it. If you think you’re going to use it, you should put the money into a bank account and save it.

        1. If I am not supposed to use it, why have it (other than being legally required to)?

          1. Insurance is for unanticipated large financial expenses. Not for things you can predict and plan for.

            1. While I agree with you in principal, that is not how clinics and hospitals are setup. I go in for something minor, and want to pay out of pocket, but they still require insurance info, and I have no idea how much things are gonna cost until I get a bill.

        2. Anyone who can afford to keep enough money to pay for hospital bills sitting in a bank getting eaten by inflation likely doesn’t have to worry much about paying bills – medical or otherwise.

    2. I don’t see how wild shifts in policy will affect waivers once they’re granted. Did you see something in the article, or know from elsewhere, that the waivers are to be temporary?

  3. Well, doesn’t this just about sum up Republican philosophy:

    Free to Choose, While Daddy Watches To Make Sure You Choose Correctly

    1. Which is why I have never fell for their bullshit about being supporters of freedom. (I didn’t fall for the Democrats’ bullshit either.)

      1. The # of people who’d allow you complete freedom is insignificant, or at least insufficient, so the relevant Q is who wants to allow you more freedom. The answer in this area is clear, Republicans.

        1. If it’s something you may exercise only if you are allowed to do so, then it is not freedom – it is permission. Free people don’t have to ask permission to live or to act. Just because one party keeps it dogs on longer leashes than the other, doesn’t mean the dog isn’t on a leash and being treated like a dog.

  4. Insurers would still be prohibited from pricing based on gender

    So this is an entirely different perpetual-motion machine, totally different than Obama’s failed contraption. It’s bound to work sooner or later if we just keep tinkering with it.

    1. Yes, but they would not be required to cover maternity.

    2. If only they would make this same law for auto insurance…

  5. What I find interesting is the difference between the passage of the ACA and the debate today.

    The ACA: We must pass it to find out what’s in it!

    The Replacement: Let’s debate and find a middle ground!

    Which option seems like the more serious of the two groups? Obviously I think the Republicans are going full retard by replacing the ACA at all considering that virtually their entire base put them in power specifically for the ‘repeal’ part, but apparently they’re afraid of…something. Not sure what though.

    Either way at least they’re having a conversation about health policy, whereas the Democrats just went ahead and passed a bill that none of them had even read. Anyone who defends that is a fool. Period. I’m sure we’re all quite screwed either way, but this is somehow still an improvement. That is scary.

    1. Afraid of losing some valuable campaign donations, being called “mean” by the mainstream media… And generally afraid of fulfilling any of their campaign promises which were all lies because they expected Hillary to win.

      1. Not to mention that they are probably also afraid of screwing up their investment portfolios.

    2. The ACA took several months to get through both houses and then through reconciliation, and the bill that first passed in the House also built from an earlier, failed bill. It was not TARP.

      1. You’re right, since TARP was a completely different bill that was completely unrelated to health care. What’s your point?

        1. It was not rushed through Congress and signed in a matter of days or even weeks. It took them a long time to get it made into law. There was a whole lot of back and forth, debate, amendments, etc. Friggin’ Obama had that health care summit that was broadcast on TV.

          You seem to be basing your accusation off of a bad memory and a bastardization of one Nancy Pelosi line.

  6. Repeal is like Yoda’s try; you do or you do not.
    If any of the ACA is left,it was not repealed.
    And, oh by the way, Republicans, you got elected to repeal Obamacare.
    Happy 2018.

    1. You can effectively gut the ACA without repealing it. Short of a 60 vote majority, that is going to be what has to happen.

      The problem was the previous bill didn’t do any actual gutting. It made mostly cosmetic changes.
      This bill allows states to effectively opt out of the ACA. If they get a waiver.

      I could be convinced otherwise if someone points out some caveats and details in the bill, but taking out the essential benefits list would effectively gut the individual mandate, because it would allow younger healthier people to out out of the system by buying hospital-only coverage.

      1. If younger, healthier people are required to buy hospital-only coverage, they are not being allowed to opt out of the system, and the individual mandate is still effectively in force.

        1. How many young, healthy people do you know who don’t have hospitaliz’n, not counting brief lapses?

          1. At my age I can’t say I know many young people at all – healthy or otherwise. But before Obamacare came along – and back when I was young myself – I knew plenty of people without hospitalization or any other kind of health insurance, because either the companies they worked for didn’t offer any, or they couldn’t afford to buy it themselves. Hell, I never had any kind of health insurance (other than what’s offered with automobile policies) except during the few years I spent in the military. Not everyone works for large companies.

  7. Jeezus H. What a bunch of morons we elect. Insurance coverage ain’t the damn problem. Lack of access to primary care doctors is in most states. Places that don’t have enough primary care doctors have the highest uninsured rates and for good reason cuz they likely don’t have hospitals or specialists either. Getting those people insured doesn’t do a damn thing to get doctors into those counties and wouldn’t do a damn thing even if those counties had enough PCP’s cuz PCP access isn’t helped by any affordable insurance. Insurance coverage/financing is little more than medical cronyism and we’ve already got a shit-ton more of that than anywhere else on Earth.

    Further, the counties that don’t have enough PCP’s also don’t have enough of an employment base to get sustainable employer-based insurance cuz – no PCP’s means an unhealthy population that can’t be reliably work-ready. Better to open a plant in a Third World country – cuz at least they have primary care doctors to keep a workforce healthy.

    1. It’s true that it seems like absolutely no one in politics is talking about the lack of primary care doctors. I’m sure driving their wages down through legislation should encourage more people to take up the 12 years of education and around $250,000 it requires to get your foot in the door.

      There’s a reason more people are going into Nursing these days than are going into the higher-level education programs. It’s easier, pays almost as well, and has way less liability. Incentives matter, but no one gives a shit.

      1. “pays almost as well”

        In Philly metro area the 2016 mean salary for doctors is about $225,000 and about $75,000 for nurses.
        Ain’t “almost as well” in my book.

        1. Is that their net, or their gross? I think if you look at the net, deducting the staff the MD has to pay for, which may include a nurse, the difference shrinks a lot.

      2. The 12 years and $250,000 in debt may be the source of a lot of our problems. AFAIK our medical education system and thus the career choices of doctors is still based on the Flexner Report (funded by Rockefeller and Carnegie) from 1910. Maybe its time for an overhaul given all the things that have changed since then.

      3. Is there some contemplated or recent legisl’n anywhere in the USA that drives the wages of PCPs down? This is nx to me, I’m interested! But I’m afraid nobody’s going to reply after this many hrs.

        1. Not so much ‘drives wages down’ as ‘forces PCP’s to treat patients like hamsters on an assembly line’. The fee-for-service model – driven by Medicare but supported by all insurance – is the wrong approach for primary care. Primary care, basically, falls almost entirely into the out-of-pocket or deductible area (everywhere in world) – so ‘insurance’ is irrelevant – but when insurance gets expensive it forces out PCP’s. People self-diagnose in order to get the costs paid by insurance – oh heart hurts better go see a cardiologist (cha-ching $400 v $100) – ooh just hurts everywhere better go to ER (cha-ching $1000 v $100).

          And fee-for-service and annual re-enrollment forces PCP’s to have huge patient bases (why its so hard to get an appt and why most don’t accept new patients) in order to fill the assembly line but that means they can’t really know their patients over time, do preventive care, or build relationship/trust while the patient is generally healthy so that when the patient does get sick they can be trusted to coordinate specialist care and hospitals (who are the ones who drive insurance costs).

          The OECD average is 1200 people/PCP. The US is 3400 people/PCP. Yeah – US PCP’s are paid more on average ($160k?) than other places ($110k?) but with 3x more patients easy to see how they can burnout and feel underpaid and just choose a specialty instead.

  8. Well, it’s a small step in the right direction. That’s about as much praise as I can honestly lavish upon it.

  9. what ever happened to tax exemptions for personal plans like employer based plans get? or any of the other 20 ideas floated by over the last 8 years by republicans?

  10. I think they should only recycle shitty bill ideas every February on Groundhog Day.

  11. Are the waivers permanent? If so, it may be of little relevance how a future administration administers the appl’ns, because it’s likely all the states that want waivers will apply while the waiver-friendly Trump admin. is in.

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