Vermont has filed a 1332 state innovation waiver to avoid building a website for its small-business insurance exchange. The state hopes to have those employers enroll directly through insurers.
Under the waiver, beginning Jan. 1, 2017, states can request that the federal government waive basically every major coverage component of the Affordable Care Act, including exchanges, benefit packages, and the individual and employer mandates. The only requirement is that a state's healthcare coverage remains consistent and adequate. Vermont is the first state to to the CMS.
A CMS spokesman didn't respond to a request for comment.
Vermont's waiver could serve as a national model for the 19 other state-based exchanges, as well as the remaining 30 states with a federally facilitated marketplace. Those states might consider using direct enrollment with insurers rather than what's known as a Small Business Health Options Program (SHOP) web portal, Joel Ario, a managing director at Manatt Health Solutions and former director at HHS, said in an . He helped establish the exchanges.
Vermont believes that its waiver will maintain streamlined access to the small-group market and avoid the market disruption associated with developing and implementing the SHOP web portal, which it is currently required to do by 2017.
Hawaii posted a draft waiver application similar to Vermont's, seeking to waive certain SHOP requirements. Massachusetts has also posted a draft waiver because it wants to continue to offer individual and small-group health insurance on the same marketplace. Neither state has submitted finalized waivers to the CMS.
Vermont had toyed with the idea of using the waiver to launch a single-payer system. The state is home to Sen. Bernie Sanders who is vying for the Democratic presidential nomination and has advocated for “Medicare for all.”
But Vermont gave up its single-payer plans in 2014, after Democratic Gov. Peter Shumlin received estimates that launching the system would cost the state more than $2 billion in 2017 alone. That would have required a major tax increase.
“I would add that the slow economic recovery likely played a major role, as it would in any state contemplating establishing any high-cost program or initiative,” said Frederick Pilot, a principal at consulting firm Pilot Project Japan Strategies. “The numbers didn't ... make it viable … Vermont is a very small state [with] a relatively healthy population,” he said.
Overall, states appear to be taking a conservative approach to the waivers, experts say. It doesn't seem to be “big-picture system change,” said John McDonough, a professor of public health practice at the Harvard School of Public Health. He added that states are still trying to figure out how much room they have to innovate.
“They also want to know who will control the White House, because that will impact their degrees of freedom,” McDonough said.
In December, HHS stressed that it would reject any 1332 waiver application that could result in a loss of coverage for state residents, especially to the most vulnerable populations such as low-income and elderly individuals, those with serious health issues, or those at risk for developing serious health issues.
HHS also stressed that it will approve the waivers only if they do not increase the federal deficit.