People like to take advantage of exceptions to the rule when they can – whether it’s for self-interest motives or for beneficence. So, naturally, it makes sense for market-minded policymakers to pursue waivers that sidestep big government health care laws like Obamacare.

One in particular that may seem appealing to limited government proponents is the “State Innovation Waiver.” As a part of section 1332 under Obamacare, the waiver supposedly grants states flexibility to restructure the way in which people obtain health coverage. States are effectively allowed to use federal funding that would otherwise finance certain of the law’s provisions, such as premium and cost-sharing subsidies for eligible exchange consumers. Section 1332 also allows for states to waive the employer mandate, the individual mandate, and provisions relating to the health insurance exchanges, such as their respective qualified health plans (QHPs) that must include the required ten essential health benefits (EHBs).

Could this really be a way to transcend Obamacare?

Should North Carolina decide to invest time and energy into section 1332 of Obamacare, there are quite a few exceptions to the exception to the rule as outlined in the Federal Register that ought to give pause. Any waiver must:

  • Have health plans provide coverage that is just as generous as Obamacare plans.
  • Cover the same number of lives as Obamacare’s projections.
  • Put a cap on out-of-pocket expenses for premiums and cost-sharing equivalent to Obamacare standards.
  • Not mess with the federal deficit.

By the looks of these constraints, any approved 1332 waiver would look awfully analogous to the status quo. The flexibility factor really only applies to states that are gunning for a single-payer system (or to states wanting to provide even more generous coverage levels). A White House conference call back in 2011 affirms my point:

The source on the call summarizes the officials’ point — which is not one the Administration has sought to make publically — as casting the new “flexibility” language as an opportunity to try more progressive, not less expansive, approaches on the state level.

“They are trying to split the baby here: on one hand tell supporters this is good for their pet issues, versus a message for the general public that the POTUS is responding to what he is hearing and that he is being sensible,” the source emails. (This CNN story reflects the public presentation.)