Section 1332 of the Affordable Care Act (ACA) once provided hopeful innovation waiver opportunity to progressive states, but now serves as another tool for the Trump Administration to undermine the ACA. New guidance from the Department of Health & Human Services and the Department of Treasury encourages use of private insurance, association plans and short-term limited duration “junk” plans and eliminates the guardrails to protect comprehensiveness of coverage, affordability and protections for vulnerable groups. The new and questionable interpretation is expected to lead to increased costs for consumers, less comprehensive coverage, coverage losses or higher out-of-pocket costs among vulnerable populations.

This guidance makes Washington State unlikely to pursue or receive a 1332 waiver under the current Administration. There were lengthy discussions earlier this year about Washington pursuing a 1332 waiver to set up a reinsurance program (as some other states have done, including Alaska, Oregon and California). On a positive note, the Insurance Commissioner adopted rules this week reducing the sale of less protective short-term plans in our state. The rules are effective in January and will still allow for the sale of short-term plans, but will require specific disclosures and other key provisions to protect consumers.