Checking in on Section 1332 State Innovation Waivers
2025 marks eight years since states began being able to seek Section 1332 State Innovation Waivers to certain provisions of the Patient Protection and Affordable Care Act (ACA). While state activity was limited to start, since January 1, 2017, nearly half of the states (21) have applied for and been awarded Section 1332 Waivers. While most states have pursued the waiver to leverage federal savings in Advance Premium Tax Credits to support a state-based reinsurance program, in more recent years, states have increasingly pursued innovative waivers.
This article is the first of a series on Section 1332 waivers, as we explore trends and impacts of these waivers and provide insights to states considering their options. As of the start of 2025, more than two-thirds of the Section 1332 states have completed or are nearing the end of their initial five-year waiver period. The fact that all such states have at least sought a waiver extension, most of which have been granted (with Pennsylvania’s request pending), demonstrates the positive impact of these waivers. Much can be learned from their extension and amendment applications – in addition to their required and public annual reports – which outline the success of these waivers. Our series will also explore changes we may see under the new administration.
About 1332 Waivers
Section 1332 of the ACA allows states to waive certain commercial insurance related provisions of the ACA:
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Subtitle D, Part I |
Sections 1301-1304: Qualified Health Plan (QHP) and Essential Health Benefits requirements; Requirements for QHP carriers; Special rules related to abortion services; Insurance-related definitions
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| Subtitle D, Part II |
Sections 1311-1313: Exchange requirements
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| Subtitle E, Part I |
Section 1402: Cost-sharing reductions
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| Internal Revenue Code of 1986 |
Sections 36B, 4980H and 5000A: Premium tax credits; Individual coverage requirement; Large employer coverage requirement
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In order to be approved, the proposed waivers must comply with four statutory guardrails. The state must demonstrate that:
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- Coverage under the waiver will be at least as comprehensive as coverage without the waiver.
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- Coverage under the waiver will be as affordable as coverage without the waiver.
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- The waiver will provide for coverage to a comparable number of state residents as would be covered without the waiver.
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- The waiver will not increase the federal deficit.
Most Section 1332 Waivers have sought to lower premiums by setting up state-based reinsurance programs to subsidize high claims costs. Health Policy News will explore these and other more recent waiver designs in future articles, but generally, states use Section 1332 Waivers to reduce Marketplace premiums, increase access to coverage and enrollment in the Marketplace, and to stabilize the insurance market.
Looking Forward
As we continue to monitor the impacts of the administration change, it is worth noting that there has been broad, bipartisan support of Section 1332 waivers. There has been a steady stream of approvals across administrations. However, concerns were raised more recently when Section 1332 Pass-through Funding was included in the proposed Federal funding freeze earlier this year. Though it has since been halted and, subsequently rescinded, states will need to be mindful of the risk to that funding as they plan going forward
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