Section 1332 Waiver Series: Unique Waiver Approaches 

For the final article in our 1332 Waiver Series, we explore unique ways that states have used Section 1332 Waivers. In the previous article, PCG outlined state approaches to Section 1332 Waiver used to fund state-based reinsurance programs. The vast majority of approved Section 1332 Waivers have been used for the creation of those programs. However, the first Section 1332 Waiver – in the state of Hawaii – and more recent approvals – including in Washington and New York – have been used to support unique approaches.  

The programs described meet the Section 1332 Waiver guardrails, requiring that coverage is at least as comprehensive coverage as without the waiver, at least as many residents are covered, coverage is at least as affordable as without the waiver, and the waiver will not increase the federal deficit. All three waivers described below also leverage the federal pass-through funding available under the waiver. 

Hawaii 

Hawaii’s first-in-the-nation Section 1332 State Innovation Waiver was first approved December 30, 2016. On August 12, 2021, the state was approved a 5-year waiver extension through the end of 2026.  

Hawaii has a long-standing state law – the Prepaid Health Care Act – that requires nearly all employers to offer coverage to their employees. In order to preserve that existing system, Hawaii’s waiver allows the state to waive the requirement that a  Small Business Health Options Program (SHOP), the Exchange for small businesses, be created in the state as well as related provisions. The waiver also waives the Small Business Health Care Tax Credit (SBTC), providing pass-through funds for Hawaii to fund state-based premium assistance for small employers. 

In the first waiver period, the waiver allowed the State to successfully provide health insurance options to employers without using the SHOP program and insure more people with the waiver than would be insured without. 

Washington 

Washington first submitted its Section 1332 Waiver in May 2022 and received approval on December 9, 2022. The waiver is effective through December 31, 2031.   

Washington has used its Section 1332 Waiver to waive section 1312(f)(3) of the ACA to allow for access to coverage for all Washington residents regardless of immigration status. The waiver allows all residents to use the state-based Exchange to access coverage. It also increases the number of people that may be eligible for the state premium tax credit. The state predicts this will lower overall healthcare costs as there will be less reliance on emergency and uncompensated care. Although it is still in early stages, at the outset of the program, the state predicted that statewide premiums would be 0.2% lower and health insurance coverage would be 1% higher than without the waiver.  

New York  

New York’s Section 1332 Waiver was originally approved on March 1, 2024 and will be effective through December 31, 2028. The waiver allows for expanded eligibility for New York’s “Essential Plan,” a health insurance plan provided by the state of New York for those who are low income but do not qualify for Medicaid. Under the waiver, the Essential Plan is open to New Yorkers who have an income between 200 and 250 percent of the federal poverty level (FPL) and certain individuals below 205 percent FPL. This expansion has provided over 100,000 additional New Yorkers with health insurance. 

An amendment to their waiver was approved in September 2024, allowing the state to establish state-based cost-sharing subsidies for certain enrollees in the New York State Health Insurance Exchange. The cost-sharing subsidies are available to those with household incomes up to 400% FPL and for all enrollees for diabetes-related services and pregnancy and postpartum care services, including mental health services. The amendment was approved from January 1, 2025 through December 31, 2028. An actuarial analysis predicted that between 2025 and 2028, exchange enrollees will save a combined $1.3 billion and New York will see a 3.9% increase in health insurance enrollment compared to enrollment without the waiver.  

Looking Forward 

While much attention was paid to the use of the Section 1332 Waiver flexibility for reinsurance waivers initially, these states show there are also opportunities to tailor the flexibility to address other state-specific needs and support existing state-based programs. States seeking to understand the broader use of these waivers can look to these states to understand the full range of opportunities available.