State Health Law Waivers: Where Will They Take Us?

The president supports state innovation in health care, but vigilance is required to ensure state reforms improve health as we continue to call for national reform.

President Obama announced at the National Governors Association on Monday that he supports an amendment to the health law that would allow states some flexibility to innovate with their own models of health reform beginning in 2014, rather than waiting until 2017, as is currently required by law. The president's concession comes as the current federal health law is deteriorating and states are complaining that the financial burden of complying with the law are too onerous in the face of serious budget deficits.

The president's endorsement of the Wyden-Brown amendment, known as the “Empowering States to Innovate Act” or S.248, allows states to apply for waivers from the health insurance exchange beginning in 2014 and would give them some federal dollars to experiment with alternative ways of providing health coverage. The federal health bill requires that any state seeking a waiver from the health insurance exchange must, at a minimum, provide coverage comparable to that specified by the federal bill (Section 1332). It is left to the discretion of the secretary of health and human services to determine if a state meets this requirement.

States that put in place a single-payer health system will surpass the coverage of federal law. A single-payer health system, improved Medicare for all, would be universal and would provide the necessary cost controls and savings that would fund comprehensive coverage, including much-needed mental health, dental and vision care.

States such as Vermont and California, which appear to be closer than any others to enacting a state single-payer health system, welcomed the president's support for the Wyden-Brown amendment because it would remove one of the many barriers they face. The amendment will still need to be passed by Congress before it arrives at the president's desk, which may, in itself, be a formidable feat in the current political climate.

In addition, for states that want to take the path of single payer, even with the amendment, there will still be many hurdles before they can implement such a plan. The amendment only moves up the date when waivers can be applied for. It does not guarantee federal approval of the many waivers a state single-payer system would need, such as being allowed to roll their Medicaid and Medicare populations into their single-payer system.

Of concern is that the president is signaling a greater willingness to allow states to opt out of the health reform bill, not because states want to provide better coverage, but because governors in some states are opposed to the federal health law altogether. Beginning shortly after passage of the law last year, there has been an effort to undermine it through court challenges to its constitutionality and, more recently, through efforts to repeal it entirely or in part by the House. Additionally, hundreds of waivers have been issued excusing businesses, union health plans and health insurers from having to comply with parts of the law. The Department of Health and Human Services now has a 24-hour turnaround time on such waivers.

Vigilance will be required to ensure that some states do not use the amendment, if it is passed, to gut important public health programs such as Medicaid and the State Children's Health Insurance Program and further privatize health care, which would be harmful to patients. According to a White House fact sheet released around the time of the president's statement, “The law also allows states to submit a single application that includes Medicaid waiver requests which could, for example, seek to give people eligible for Medicaid the choice of enrolling in [health insurance] exchange plans.” A change such as this would undermine Medicaid and shift more people into more expensive and less protective private insurance plans.

Efforts are already underway in Wisconsin to take control of the state's Medicaid programs away from the state Legislature and end the public's ability to have a voice in the process and, instead, give full authority over the program to the governor's office. Gov. Scott Walker appointed Dennis Smith, a former Heritage Foundation fellow who has written about moving people out of Medicaid and raising co-pays for those still in Medicaid, as his secretary of health.

Wisconsin is not alone in challenging Medicaid. According to The Wall Street Journal, more than half the states want permission to remove hundreds of thousands of people from Medicaid. Other states like New York and Arizona are cutting benefits of health programs that already provide insufficient coverage.

Decades of experience in the United States shows that the market model fails when it comes to financing health care. Health is a necessity, not a commodity. A system based on the purchase of private insurance results in higher costs and poorer outcomes. Patients who cannot afford necessary care get sick, defer treatment and develop preventable complications, sometimes fatal ones. Families experience personal bankruptcy when a serious illness or accident occurs. With increased political pressure and Secretary Sebelius already issuing hundreds of waivers, can further privatization of health care be prevented?

While some welcome the president's support for the amendment and hope that, if it passes, a state will be able to demonstrate the benefits of a single-payer system, as happened in Saskatchewan (and which led to Canada's national Medicare system), it is possible that the actual outcome of such an amendment will be a further attack on our necessary public health programs. For this reason, it is imperative that we continue to push for a national health program, improved Medicare for all in the US.

“It would require fewer waivers and be simpler to enact improved Medicare for all at the national level,” says Dr. Garrett Adams, president of Physicians for a National Health Program. “Not only is it simpler, but it would save lives and end personal bankruptcy caused by medical illness. We would like to see a national Medicare-for-all system enacted sooner rather than later. Every day that we wait, hundreds of Americans die of preventable causes.”

Physicians for a National Health Program advocates for a national, publicly financed and privately delivered health system: an improved Medicare for All as embodied in H.R. 676, the “Expanded and Improved Medicare for All Act.” Among the benefits of such a program are that it is a simpler system for patients and health professionals, recaptures about $400 billion annually in unnecessary paperwork and bureaucracy and directs that money into care, allows freedom to choose one's health provider and more control over one's treatment, is universal and provides comprehensive health benefits while at the same time effectively controlling our soaring health care costs. In this time of fiscal and health crises, national Medicare for all is more important than ever.