Trump can give states more power over ObamaCare with one small fix
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Restoring power to the states and offering flexibility for them to experiment is the best way forward in healthcare policy.

To fulfill campaign pledges to repeal and replace the failed regulatory apparatus created by the Affordable Care Act (ACA), President Trump and his allies in Congress proposed a three-phased plan. Thus far, that plan has yet to come together.

Phase one, according to Republican leaders, was the bill that Speaker Paul RyanPaul Davis RyanBiden's relationship with top House Republican is frosty The Hill's Morning Report - Presented by Emergent BioSolutions - Facebook upholds Trump ban; GOP leaders back Stefanik to replace Cheney Budowsky: Liz Cheney vs. conservatives in name only MORE (R-Wis.) pulled from the House floor just hours before its scheduled vote last month because House conservatives and moderates refused to support it.


Phase two, they say, proffers a series of executive actions that would rewrite the Obama-era regulations implementing and enforcing the ACA, to be followed by more robust legislative reforms in phase three that most believe have only a snowball's chance.


With repeal-and-replace legislation mired in Washington's proverbial swamp for the foreseeable future, phase two offers the clearest path for restoring sanity in the health insurance markets by returning regulatory oversight and flexibility to the states.

Trump would be wise to take it.

The ACA transferred significant regulatory control from state policymakers to bureaucrats in Washington. Adding insult to injury, the Obama administration removed what little regulatory flexibility remained for states when it issued "agency guidance" in December 2015 indicating that the secretary of Health and Human Services would not look favorably on state requests for "innovation waivers" allowed under Section 1332 of the ACA.

Section 1332 waivers promised states some flexibility to tailor health insurance regulations more suited to their respective markets, budgets and citizens, and thus would have returned some of the states' traditional regulatory control over insurance markets.

Obama's administration all but reneged on that promise.

In signaling its intention to reject most 1332 waiver requests, the Obama administration ignored the pleas of the bipartisan National Governors Association, flexed the executive branch's regulatory muscle under, and made clear that it never intended to allow states to innovate or participate as real partners in the regulatory process.

Ohio, for example, sought an innovation waiver that would have freed businesses and individuals from the employer and individual mandate requirements that have made health insurance in Ohio more expensive. State policymakers wanted better alternatives to some of the federal regulatory requirements and had hoped that a Section 1332 waiver would ease those restrictions, lighten the financial burdens they impose and allow Ohio to make health insurance more affordable.

Obama's agency guidance dashed any such hope.

Because of that guidance, states cannot count their savings from the Medicaid program as savings in a 1332 waiver request, which creates problems for states including Ohio, which would otherwise be able to transition Medicaid recipients out of government-sponsored insurance and in to private insurance coverage. Health and Human Services effectively told states that any money saved from Medicaid or administrative expenses in such cases could not be used to provide alternative, private coverage — making it even harder for states to achieve the budget neutrality needed to have any chance of receiving an approved waiver.

Trump's victory in November, however, has the potential to change all of that — and he does not need majorities in the House and Senate to carry out agency actions in phase two. An agency's regulatory guidance does not pack the same punch as a statute or even a regulation. Whereas a statute remains the law until Congress repeals it and a regulation remains enforceable until another administration rescinds it, agency guidance merely indicates how an agency will likely rule on a question or circumstance. And such an indication may be changed or retracted by a new administration just as quickly and cleanly as the old administration issued it.

No fuss, no muss.

Early signs of a Trump-era phase two have already been seen. Health and Human Services Secretary Tom Price has issued a letter promising states more flexibility on granting waivers for Medicaid plans and highlighted a 1332 waiver from Alaska. Similar agency actions can and should be taken by Trump's administration so that while a Republican repeal of the ACA flounders in the as of yet-undrained swamp, Trump can send his own powerful signal that his administration — unlike his predecessor's — welcomes state-led innovation on health insurance reform.

With one bold stroke of his shiny pen, President Trump can rescind the Obama administration's ill-advised guidance on 1332 waivers and let states know that they have a partner in Washington again who is willing to make a deal.

Rea S. Hederman Jr. is executive vice president and chief operating officer of the Buckeye Institute and an expert in healthcare policy.

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