Kentucky Can’t Reform Medicaid Under Section 1332 of ObamaCare

Co-authored with Jonathan Ingram.

On Wednesday, Kentucky Governor Matt Bevin announced that he was planning to keep Obamacare’s Medicaid expansion, but would seek federal waivers to “transform” the program. But Bevin’s plan is already hitting an a snag: he wants to use a Section 1332 waiver to “transform Medicaid.” The snag: Section 1332 doesn’t provide any authority for Medicaid reform.

These waivers were created under Section 1332 of the Patient Protection and Affordable Care Act, otherwise known as Obamacare. Starting in 2017, they allow states to tinker with a few Obamacare rules, but only if they meet certain statutory conditions.

States would be required to:

• Provide benefits at least as generous as Obamacare,
• Cap cost sharing at least as low as Obamacare,
• Cover at least as many people as Obamacare
• And worse yet, experimenting with these waivers would put state taxpayers at risk for cost overruns for federal programs.

Federal Government Holding All the Cards

As usual, Washington bureaucrats hold all the cards and they’re interested in only one thing: protecting and expanding Obamacare. In fact, Obama administration officials and advisors have proclaimed that these waivers serve as a backdoor to implement welfare policies that are even more liberal than Obamacare. And that’s exactly what states have attempted.

The state of Vermont, for example, tried to use a Section 1332 waiver to implement a single-payer, universal health care system. The state hired Obamacare architect Jonathan Gruber, and other academics, to help design the new system, but after nearly four years of trying to find a way to make it work, Democratic Governor Peter Shumlin was forced to abandon the plan altogether.