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September 2015 St@teside

Hawaii Releases Section 1332 Waiver Proposal

On September 9, 2015, Hawaii released its draft 1332 waiver proposal, making it the first state in the nation to do so. Section 1332 of the Affordable Care Act (ACA) allows states to redesign their health insurance systems by waiving certain ACA requirements, including covered benefits, subsidies, insurance marketplaces, and individual and employer mandates. However, states must still accomplish the coverage and affordability goals of the ACA.

Through its waiver, Hawaii is seeking to waive the Small Business Health Options Program (SHOP) and several related provisions, and maintain the Hawaii Prepaid Health Care Act. Established in 1974, the Hawaii Prepaid Health Care Act requires employers with at least one permanent full-time employee to purchase health insurance coverage for their employees, and the employees’ premium contributions cannot exceed 1.5% of their wages. Given this progressive health coverage policy, Hawaii believes that “SHOP adds nothing in terms of value or incentives and has served only to increase small business insurance costs,” and that a SHOP waiver will “ensure the effective cooperation among insurers, employees, employers, and state agencies that has enjoyed an exemplary level of compliance without adding significantly to administrative costs.” The draft waiver is open for public comments until October 31, 2015.

While Hawaii is paving the way in developing 1332 waivers and subsequently negotiating with the federal government, other states are considering their own 1332 waivers. Minnesota, for example, created theTask Force on Health Care Financing, which will consider the states’ options for using a 1332 waiver to improve the state’s health insurance programs. The Task Force and its various workgroups began meeting in September 2015, and the materials and resources from these meetings can be found here.

Approved waivers can go into effect as early as January 1, 2017, and this will be something to follow as a potential catalyst for innovation at the state level.

For additional information on 1332 waivers, check out the following resources: