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March 15, 2011
President Supports Flexibility Within ACA, New Proposed Rules

President Obama said he supports the Empowering States to Innovate Act, a bill that amends the Affordable Care Act (ACA) to allow states to withdraw from certain ACA mandates in 2014 rather than in 2017, as long as they adopt alternative means to meet the reform law’s coverage and cost objectives.

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“If your state can create a plan that covers as many people as affordably and comprehensively as the Affordable Care Act does -- without increasing the deficit -- you can implement that plan. And we’ll work with you to do it,” the President announced at the National Governors Association Meeting.

The Empowering States to Innovate Act would amend the ACA to allow states to apply for waivers of certain health insurance coverage requirements in such Act for plan years beginning on or after January 1, 2014, earlier than the current date of January 1, 2017.

The bill also would require the waiver application process to begin no later than 180 days after the enactment of the Empowering States to Innovate Act.

Overview of “State Innovation Waivers”
Under the ACA, state innovation waivers allow states to implement alternative policies, as long as they:

  • Provide coverage that is at least as comprehensive as the coverage offered through Exchanges.
  • Make coverage at least as affordable as it would have been through the Exchanges.
  • Provide coverage to at least as many residents as the ACA would have provided.
  • Do not increase the Federal deficit.

A White House fact sheet outlines several proposals that could qualify, including:

  • A streamlined system that links tax credits for small businesses with tax credits for low-income families.
  • Alternatives to the individual responsibility provision – such as automatically enrolling individuals in health plans – that achieve similar outcomes.
  • Alternative health plan options to increase competition and provide consumers with additional choices.
  • An increase in the number of benefit levels to provide more choices for individuals and small businesses.
  • Immediately allowing large businesses interested in doing so to purchase health insurance through the new private marketplace, the State-based health insurance Exchange.

Proposed Rules
Last week, the Departments of Health and Human Services (HHS) and Treasury proposed new rules outlining the steps states can take to receive a State Innovation Waiver under the ACA. provides an outline of the proposed rules:

  • Public Notice: At the state and federal level, the law ensures an opportunity for public input. The proposed regulation outlines how public notice and comment should work, including public hearings, to ensure a meaningful level of public involvement, input, and transparency.
  • Content of the Application: Consistent with what is required by the law, the proposed rule says that an application must include:
    • The provisions of law that the state seeks to waive;
      • An explanation of how the proposed waiver will meet the goals related to coverage expansion, affordability, comprehensiveness of coverage, and costs;
      • A budget plan that does not increase the federal deficit, with supporting information;
      • Actuarial certifications and economic analysis to support the state’s estimates that the proposed waiver will comply with the comprehensive coverage requirement, the affordability requirement, and the scope of coverage requirement; and
      • Analyses of the waiver’s potential impact on provisions that are not waived, access to health care services when residents leave the state, and deterring waste, fraud, and abuse.
  • Periodic Reports: Under the proposed regulations, states with waivers would submit quarterly and annual reports. They would track measures in the four key areas: affordability, comprehensiveness of coverage, the number of people covered, and impact on the federal deficit.
  • Post-Award Evaluation: The proposed regulations suggest criteria that could be used in the evaluation of the waivers while they are in place.

Public comment is welcome on the State Innovation Waiver process outlined in this proposed regulation. To find the proposed regulation, visit


FACT SHEET: The Affordable Care Act: Supporting Innovation, Empowering States

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