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REDLINE OF CHANGES TO CURRENT LAW

ACA SECTION 1332 STATE INNOVATION WAIVERS

42 U.S. Code 18052 - Waiver for State innovation

(a) Application

(1) In general A State may apply to the Secretary for the waiver of all or any requirements described in
paragraph (2) with respect to health insurance coverage within that State for plan years beginning on or
after January 1, 2017. Such application shall

(A) be filed at such time and in such manner as the Secretary may require;
(B) contain such information as the Secretary may require, including
(i) a comprehensive description of the State legislation and program to implement a plan
meeting the requirements for a waiver under this section; and
(ii) a 10-year budget plan for such plan that is budget neutral for the Federal Government
over both the term of the proposed waiver and the term of the 10-year budget plan; and
(C) provide an assurance that the State has enacted the law a law or has in effect a certification
described in subsection (b)(2)(3).

(2) Requirements The requirements described in this paragraph with respect to health insurance coverage
within the State for plan years beginning on or after January 1, 2014, are as follows:
(A) Part A of this subchapter.
(B) Part B of this subchapter.
(C) Section 18071 of this title.
(D) Sections 36B, 4980H, and 5000A of title 26.

(3) Pass through of funding

With respect to a State waiver under paragraph (1), under which, due to the structure of the State plan,
individuals and small employers in the State would not qualify for or would qualify for a reduced portion
of the premium tax credits, cost-sharing reductions, or small business credits under sections[1] 36B of
title 26 or under part I of subtitle E, or the State would not qualify for or would qualify for a reduced
portion of basic health program funds under section 1331, for which they would otherwise be eligible, the
Secretary shall provide for an alternative means by which the aggregate amount of such credits or
reductions that would have been paid on behalf of participants in the Exchanges established under this
title[2], or basic health program funds the State would have received, had the State not received such
waiver, shall be paid to the State for purposes of implementing the State plan under the waiver or for
implementing the basic health program established under section 1331. Such amount shall be determined
annually by the Secretary, taking into consideration the experience of other States with respect to
participation in an Exchange and credits and reductions provided under such provisions to residents of the
other States, and with respect to participation in the basic health program and funds provided to such
other States under section 1331. A State may request that all of, or any portion of, such aggregate amount
of such credits, reductions, or funds be paid to the State as described in the first sentence.
(4) Waiver consideration and transparency

(A) In general An application for a waiver under this section shall be considered by the Secretary
in accordance with the regulations described in subparagraph (B), as applicable.
(B) Regulations Not later than 180 days after March 23, 2010, the Secretary may shall
promulgate regulations relating to waivers under this section that provide

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(i) a process for public notice and comment at the State level, including public hearings,
sufficient to ensure a meaningful level of public input;
(ii) a process for the submission of an application that ensures the disclosure of
(I) the provisions of law that the State involved seeks to waive; and
(II) the specific plans of the State to ensure that the waiver will be in compliance
with subsection (b);
(iii) a process for providing public notice and comment after the application is received
by the Secretary, that is sufficient to ensure a meaningful level of public input and that
does not impose requirements that are in addition to, or duplicative of, requirements
imposed under the Administrative Procedures Act,2 or requirements that are unreasonable
or unnecessarily burdensome with respect to State compliance;
(iv) a process for the submission to the Secretary of periodic reports by the State
concerning the implementation of the program under the waiver; and
(v) a process for the periodic evaluation by the Secretary of the program under the
waiver.
(C) Report The Secretary shall annually report to Congress concerning actions taken by the
Secretary with respect to applications for waivers under this section.

(5) Coordinated waiver process

The Secretary shall develop a process for coordinating and consolidating the State waiver processes
applicable under the provisions of this section, and the existing waiver processes applicable under titles
XVIII, XIX, and XXI of the Social Security Act [42 U.S.C. 1395 et seq., 1396 et seq., 1397aa et seq.],
and any other Federal law relating to the provision of health care items or services. Such process shall
permit a State to submit a single application for a waiver under any or all of such provisions.
(6) Definition In this section, the term Secretary means
(A) the Secretary of Health and Human Services with respect to waivers relating to the provisions
described in subparagraph (A) through (C) of paragraph (2); and
(B) the Secretary of the Treasury with respect to waivers relating to the provisions described in
paragraph (2)(D).

(b) Granting of waivers

(1) In general The Secretary may grant a request for a waiver under subsection (a)(1) only if the
Secretary determines that the State plan

(A) will provide coverage that is at least as comprehensive as the coverage defined in section
18022(b) of this title and offered through Exchanges established under this title2 as certified by
Office[3] of the Actuary of the Centers for Medicare & Medicaid Services based on sufficient
data from the State and from comparable States about their experience with programs created by
this Act and the provisions of this Act that would be waived;

(B) will provide coverage and cost sharing protections against excessive out-of-pocket spending
that are at least as affordable of comparable affordability, including for low-income people,
people with serious health needs, and other vulnerable populations as the provisions of this title2
would provide;

(C) will provide coverage to at least a comparable number of its residents as the provisions of this
title2 would provide; and

(D) will not increase the Federal deficit.

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(D)(i) will not increase the Federal deficit over the term of the waiver; and
(ii) will not increase the Federal deficit over the term of the 10-year budget plan submitted under
subsection (a)(1)(B)(ii).

(2) BUDGETARY EFFECT.

(A) IN GENERAL.In determining whether a State plan submitted under subsection (a) meets the
budget neutrality requirements of paragraph (1)(D), the Secretary may take into consideration the
direct budgetary effect of the provisions of such plan on sources of Federal funding other than the
funding described in subsection (a)(3).
(B) LIMITATION.A determination made by the Secretary under subparagraph (A)
(i) shall not be construed to affect any waiver process or standards in effect on the date of
enactment of the [short title] under title XVIII, XIX, or XXI of the Social Security Act, or
any other Federal law relating to the provision of health care items or services; and
(ii) shall be made without regard to any changes in policy with respect to any waiver
process or provision of health care items or services described in clause (i).

(2) (3) Requirement to enact a law OR CERTIFY

(A) In general. A law

(i) LAWS.A law described in this paragraph is a State law that provides for State
actions under a waiver under this section, including the implementation of the State plan
under subsection (a)(1)(B).

(ii) CERTIFICATIONS.A certification described in this paragraph is a document, signed

by the Governor of the State, that certifies that such Governor has the authority under
existing Federal and State law to take action under this section, including implementation
of the State plan under subsection (a)(1)(B).

(B) Termination of opt out A State may repeal a law described in subparagraph (A) and
terminate the authority provided under the waiver with respect to the State. may terminate the
authority provided under the waiver with respect to the State by
(i) repealing a law described in subparagraph (A)(i); or
(ii) terminating a certification described in subparagraph (A)(ii), through a certification
for such termination signed by the Governor of the State.

(c) Scope of waiver

(1) In general
The Secretary shall determine the scope of a waiver of a requirement described in subsection
(a)(2) granted to a State under subsection (a)(1).
(2) Limitation
The Secretary may not waive under this section any Federal law or requirement that is not within
the authority of the Secretary.
(d) Determinations by Secretary
(1) Time for determination
The Secretary shall make a determination under subsection (a)(1) not later than 180 90 days after
the receipt of an application from a State under such subsection.

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(2) Effect of determination

(A) Granting of waivers
If the Secretary determines to grant a waiver under subsection (a)(1), the Secretary shall
notify the State involved of such determination and the terms and effectiveness of such
waiver.
(B) Denial of waiver
If the Secretary determines a waiver should not be granted under subsection (a)(1), the
Secretary shall notify the State involved, and the appropriate committees of Congress of
such determination and the reasons therefore.
(3) EXPEDITED DETERMINATION.
(A) IN GENERAL.With respect to any application under subsection (a)(1) submitted on or
after the date of enactment of the [short title] or any such application submitted prior to such
date of enactment and under review by the Secretary on such date of enactment, the Secretary
shall make a determination on such application, using the criteria for approval otherwise
applicable under this section, not later than 45 days after the receipt of such application, and
shall allow the public notice and comment at the State and Federal levels described under
subsection (a)(4) to occur concurrently if such State application
(i) is submitted in response to an urgent situation, with respect to areas in the State that
the Secretary determines are at risk for excessive premium increases or having no health
plans offered in the applicable health insurance market for the current or following plan
year; and
(ii) is for a waiver that is the same or substantially similar to a waiver that the
Secretary already has approved for another State.
(B) APPROVAL.
(i) URGENT SITUATIONS.
(I) PROVISIONAL APPROVAL.A waiver approved under the expedited
determination process under subparagraph (A)(i) shall be in effect for a period of 3
years, unless the State requests a shorter duration.
(II) FULL APPROVAL.Subject to the requirements for approval otherwise
applicable under this section, not later than 1 year before the expiration of a
provisional waiver period described in subclause (I) with respect to an application
described in subparagraph (A)(i), the Secretary shall make a determination on
whether to extend the approval of such waiver for the full term of the waiver
requested by the State, for a total approval period not to exceed 6 years. The
Secretary may request additional information as the Secretary determines
appropriate to make such determination.
(ii) APPROVAL OF SAME OR SIMILAR APPLICATIONS.An approval of a waiver under
subparagraph (A)(ii) shall be subject to the terms of subsection (e).
(C) GAO STUDY.Not later than 5 years after the date of enactment of the [short title], the
Comptroller General of the United States shall conduct a review of all waivers approved
pursuant to an application under subparagraph (A)(ii) to evaluate whether such waivers met the
requirements of subsection (b)(1) and whether the applications should have qualified for such
expedited process.

(e) Term of waiver

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No waiver under this section may extend over a period of longer than 5 years unless the State requests
continuation of such waiver, and such request shall be deemed granted unless the Secretary, within 90
days after the date of its submission to the Secretary, either denies such request in writing or informs the
State in writing with respect to any additional information which is needed in order to make a final
determination with respect to the request.
A waiver under this section
(1) shall be in effect for a period of 6 years unless the State requests a shorter duration;
(2) may be renewed, subject to the State meeting the criteria for approval otherwise applicable
under this section, for unlimited additional 6-year periods upon application by the State; and
(3) may not be suspended or terminated, in whole or in part, by the Secretary at any time before
the date of expiration of the waiver period (including any renewal period under paragraph (2)),
unless the Secretary determines that the State materially failed to comply with the terms and
conditions of the waiver.
(f) Guidance and Regulations.
(1) IN GENERAL.With respect to carrying out this section, the Secretary shall
(A) issue guidance, not later than 30 days after the date of enactment of the [short title], that
includes initial examples of model State plans that meet the requirements for approval under
this section;
(B) periodically review the guidance issued under subparagraph (A) and when appropriate,
issue additional examples of model State plans that meet the requirements for approval under
this section, which may include
(i) State plans establishing reinsurance or invisible high-risk pool arrangements for
purposes of covering the cost of high-risk individuals;
(ii) State plans expanding insurer participation, access to affordable health plans,
network adequacy, and health plan options over the entire applicable health insurance
market in the State;
(iii) waivers encouraging or requiring health plans in such State to deploy value-based
insurance designs which structure enrollee cost-sharing and other health plan design
elements to encourage enrollees to consume high-value clinical services;
(iv) State plans allowing for significant variation in health plan benefit design; or
(v) any other State plan as the Secretary determines appropriate.

(2) RESCISSION OF PREVIOUS REGULATIONS AND GUIDANCE.Beginning on the date of

enactment of the [short title], the regulations promulgated, and the guidance issued, under this
section prior to the date of enactment of the [short title] shall have no force or effect.

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RELATED PROVISION:
Applicability.The amendments made by this Act to section 1332 of the Patient Protection and
Affordable Care Act (42 U.S.C. 18052)
(1) with respect to applications for waivers under such section 1332 submitted after the date of
enactment of this Act and applications for such waivers submitted prior to such date of enactment
and under review by the Secretary on the date of enactment, shall take effect on the date of
enactment of this Act; and
(2) with respect to applications for waivers approved under such section 1332 before the date of
enactment of this Act, shall not require reconsideration of whether such applications meet the
requirements of such section 1332, except that, at the request of a State, the Secretary shall
recalculate the amount of funding provided under subsection (a)(3) of such section.