The Wyden Waiver (Section 1332 of PPACA) is an extremely interesting dare built into the Affordable Care Act that if the Republican Party was interested in policy, we should be hearing a lot about early prep work. The dare is simple:
If a state can do as well or better in providing as good coverage to as many people at the same or lower cost as provided through the Exchanges but can do so in a different model, they can build out an Obamacare alternative effective 1/1/17.
The feds would kick in the entire expected sum of premium subsidies, cost sharing assistance subsidies and small business subsidies to the state. The state could tweak benefit packages, get rid of the mandates, change essential health benefits and pay for those changes with the federal block grant. Vermont had planned on a Wyden Waiver for its single payer plan that fell apart on the issue of transition costs.
The big constraints on a Wyden Waiver is that it had to be deficit neutral for the federal government and it had to be as good or better than the current Exchange model.
When PPACA was first scored by the CBO (March 20, 2010 report, Table 3), the CBO expected the Exchange and small business tax credits to cost $78 billion dollars in 2017. That estimate has been steadily decreasing. Now, the March 2015 baseline has an estimate of $73 billion dollars for direct coverage expansion costs on the Exchange. Premium costs are still growing slower than expected and the CBO is starting to model that there has been a real and sustained slow down in medical inflation that is somewhat disconected from general economic conditions.
Innovating programs that can do the better with the same level of resources are far easier to pull off when the budget is fat. My question is what does the declining net cost of coverage expansion through both lower unit cost and higher employer sponsored insurance uptake do to the feasibility of states that want to go the Wyden Waiver route? A cheaper PPACA means the success zone’s lower boundary got higher and the entire zone got narrower.