In a speech to governors, President Obama just endorsed a plan to allow states to opt out of major provisions of the Affordable Care Act just as it’s set to kick in. Saying he recognizes that not everyone is a member of the “Affordable Care Act fan club,” Obama said, “I agree with Mitt Romney that…states should have the power to implement their own solutions.”
The plan Obama endorsed, first proposed back in November by Democratic Sen. Ron Wyden and Republican Sen. Scott Brown, would give states flexibility to design their own versions of health reform. States could buck many aspects of the federal approach, including the individual mandate, employer requirements, health insurance exchanges and the federal design for insurance policies. Under this system, states would receive their share of insurance subsidies and administrative funding in blocks to implement their own reforms. In order to be granted a waiver to do this, a state would need to show its plan would:
* not increase the federal deficit
* provide insurance to as many people as the ACA
* provide insurance as least as comprehensive as that called for in the ACA
* provide insurance that’s just as affordable
While Obama is proposing the state opt-out plan now in order to appear responsive to Republican governors complaining about the ACA, the “Waiver for State Innovation” is already a part of the health reform law. It’s just now slated to become an available option for states in 2017. The Wyden-Brown plan – also championed by Democratic Sen. Mary Landreiu – would move that date back to 2014. That’s the year most the ACA is scheduled to begin.
According to the New York Times:
[Administration] officials said Congressional bill writers picked the 2017 date after the Congressional Budget Office said it would take three years of experience to determine how much a state should receive in unrestricted block grants if it opted out of aspects of the law. Otherwise, the budget analysts advised last year, the legislation’s 10-year cost estimate would be about $4 billion higher because Washington would probably have to make higher-than-needed payments to states.
The administration officials said they had not yet discussed where to find an additional $4 billion, but described it as “not a lot of money” when compared with the estimated $1 trillion, 10-year cost of the law. They said they had not yet consulted with Congressional leaders to map a strategy for enacting the amendment.
As I wrote in November, there’s no guarantee Republicans governors will embrace this 2014 opt-out waiver plan, which would have to pass through Congress to become law:
Aside from the political implications of endorsing a plan championed by a Democratic leader on health reform – even if he is in cahoots with a Republican from a blue state – some on the right might balk at the Wyden-Brown plan on the grounds that it’s still an expensive expansion of government. The Wyden-Brown plan, after all, does not – as far as I can tell – spend any less money than the ACA without a state opt-out. On the contrary, it may cost more.
The Wyden-Brown plan also does not impact the huge Medicaid expansion called for in the ACA, which Republicans vehemently oppose. It doesn’t eliminate taxes on expensive health insurance plans, or fees levied on medical devices or pharmaceuticals.
Another catch: The Wyden-Brown plan only allows states to opt out if they have a good plan for how to undertake comprehensive health care reform on their own. Most states don’t have such a plan. Massachusetts, which enacted reform in 2007, obviously does, which is why Brown was a logical co-sponsor of the opt-out bill. California, Connecticut and Vermont are three other states that are on their way toward developing health care reform inside their borders. But red states – especially southern states – are among those least equipped to design and implement reform that could accomplish what the ACA attempts to do, as they typically have higher percentages of uninsured residents and looser insurance regulation.
