Bipartisan bill would accelerate state opt-out provision in health law

Democratic Sen. Ron Wyden (Ore.) and Republican Sen. Scott Brown (Mass.) may have found a way to take the partisan venom out of the healthcare reform debate, according to some state officials and policy experts.

The senators introduced legislation on Thursday that would accelerate, by three years, a little-known provision that Wyden included in the Democrats’ healthcare law. The change advocated by Wyden and Brown would allow states to seek waivers from some of the healthcare law’s requirements — including federal regulations that Republicans have decried as an intrusion on the states — beginning in 2014, when most of the law’s major provisions are scheduled to take effect.

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The waiver would allow states to opt out of central parts of the healthcare law, including the individual mandate to buy health insurance and the employer mandate to provide it or pay a fine.

But there’s a catch: In order to receive a waiver from the regulations, states would have to meet the healthcare targets that the federal law requires. States would need to set up a health insurance system that covers at least as many people as prescribed under the federal law, and the plans would have to meet requirements for affordability and comprehensiveness.

"It really is a clever way to force an adult conversation," said Len Nichols, a professor of health policy at George Mason University. "It brings the conversation to the level where the state has to consider its options."

The Wyden-Brown proposal is significant because it represents the first bipartisan proposal to alter the healthcare law since the midterm elections. The GOP captured the House on a wave of voter discontent with the economy and the healthcare bill, and has vowed to “repeal and replace” the law in the years ahead. Democrats will retain control of the Senate in the next Congress and are sure to oppose Republicans at every turn.

The appeal of the Wyden-Brown proposal, experts say, is that it would shelter states from some of the most demanding requirements of the healthcare law while giving them the freedom to pursue their own vision for reform.

"It doesn't make sense — especially given the current budget environment — to force states to put off or abandon healthcare innovations in order to fully implement the federal law," Wyden said in a statement introducing the bill. "Bumping up the start date means that states can focus on ways to make the new health law work at its best from day one."

Wyden managed to get the waiver authority included in the original healthcare bill, but it doesn’t take effect until 2017. The new proposal would bring that date up to 2014, before the law's main provisions — including the mandates and the exchanges — go into effect.

State officials have complained that offering the waivers in 2017 gives them little choice but to spend millions of dollars to meet the federal standards. Having made that kind of investment, one state official said, the only states that would be likely to seek waivers down the line are the ones whose three-year experiment with the federal law was an abject failure.

Kansas Insurance Commissioner Sandy Praeger said moving the waiver option up three years could encourage state legislatures and governors who dislike the law to work on their own solutions instead of passively hoping for repeal in Congress.

Praeger added, however, that states should also establish an exchange in case their waiver request is denied. The federal government is required by law to take charge in states that haven’t made substantial progress in establishing a health insurance exchange by 2012.

“The safer approach would be to get authorization through their state legislature to start their own exchange,” Praeger said. “As you work through the process, you find elements where you might want to get a waiver.”

Others say the waivers might not even be necessary, depending on how much leeway the Department of Health and Human Services (HHS) allows when it issues guidelines for the exchanges.

“The question of whether legislation is needed really depends on how flexible HHS is willing to be,” said the state official.

The Wyden-Brown bill has yet to receive much support on Capitol Hill.

Republicans have already begun attacking Wyden-Brown, saying it doesn't address major aspects of the Democrats' bill such as requiring generous health coverage. Some conservatives have warned Republicans against seeking improvements to the health reform law, saying it is fatally flawed.

"You don't want to improve the bill," James Capretta, a former Office of Management and Budget staffer, said last month at a Hudson Institute event. "The bill is unredeemable."

Nichols said the reason for the 2017 timeframe was to force states to start meeting the goals of the health reform law and reach a basic level of coverage nationwide. But he said moving the date forward could make sense if states have to show a serious proposal that would meet the law's coverage goals.

The White House has so far stayed neutral on Wyden and Brown’s proposal.

"The president has said that he will work with members of Congress who have healthcare proposals which do not undermine the important protections offered to Americans under the Affordable Care Act," an administration official told The Hill. "The administration will examine this proposal as we move forward.”

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