'Don't Litigate, Innovate.' How To Implement A Fully Funded Alternative To The New Health Care Overhaul -- And It's Already In The Law

Nov 22, 2010

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What if a Republican governor and a Republican legislature had the ability to implement their version of health insurance reform and the federal government would have to pay for it? It's a great idea. And I'm thrilled to say that a bi-partisan bill has already been introduced in the Senate by Ron Wyden, D-Ore., and Scott Brown, R-Mass., that would help facilitate exactly this end.

First, let's review section 1332 of The Patient Protection and Affordable Care Act to realize how states are already -- at least eventually -- given the ability to innovate in this manner. Here is a simplified summary:

• A state may apply to the Health and Human Services secretary for a waiver of all or any requirements with respect to the insurance exchanges, mandates, and subsidies with respect to health insurance coverage within that state for plan years beginning on or after January 1, 2017.

• The secretary shall provide for an alternative means by which the aggregate amount of the tax credits and subsidies, which would have been paid on behalf of participants in the exchanges, would instead be paid to the state for purposes of implementing their own version of the law.

• The secretary may grant a request for a waiver only if the secretary determines that the state plan will provide coverage that is at least as comprehensive as the coverage defined under the new law and offered through similar exchanges established by the states.

The bottom line is that the new law invites states to present HHS with an alternative to the insurance provisions of the new health law and gives the secretary the ability provide the state with the same funding it would have received under the overhaul so long as the state can get the same number of people covered under similar coverage.

Arguably, that waiver request could be absent the individual mandate, the employer mandate or any other key provision in the new law so long as the state made a credible argument that they could reach the same expansion target.

Is it a pipe dream that any state would take the same amount of federal money that would have been spent there anyway as a result of the health overhaul and instead build its own version of health reform? Maybe not. And the Republicans may be perfectly positioned to put such plans into action.

The 2010 mid-term elections were not only a big congressional victory for the Republicans but a big victory in the governors mansions and state legislatures as well. Republicans picked up 680 seats in state legislatures (by comparison Republicans won 472 seats in the last Republican landslide in 1994). They now control both houses of the state legislature in 26 states. And they control the entire state legislature and the governor's mansion in 16 states! In other words, Republicans have the electoral "trifecta" in 16 states -- they can pretty much pass whatever they want.

If Republicans really know how to implement the right kind of health care reform system they have a heck of an opportunity because the Democratic health care law says that, with a waiver, they can get their hands on all the health law’s federal money.

And it's not just Republicans that might want to innovate. I am hearing there are a number of Democratic governors taking a look at this provision in the law. The one catch is that neither Republicans nor Democrats can implement their state version of a health insurance system prior to January 1, 2017.

But then the Congressional Republicans say they want to fix the new health care law the Democrats just passed.

It would seem to me that House could pass a bill enabling the states to move much sooner than 2017 and, if it did, Democrats in the Senate, as well as the President, would be hard pressed to block them.

After all, a state wouldn't be entitled to the federal health insurance reform money unless a Democratic HHS Secretary (a certainty until at least January 2013) certified that the state's plan was going to cover at least as many people as well as the federal law was going to do it.

In fact, the bill introduced by Sen. Wyden and Sen. Brown would roll the date back to January 1, 2014.

Maybe some of these Republican state attorneys general ought to drop their lawsuits that call into question the constitutionality of the new health law and just suggest their governors get behind the Wyden-Brown bill and show us how to do it the right way!