Summary of Hawaii’s Proposed §1332 waiver
§1332 waivers allow each state to tailor the Affordable Care Act (ACA) to its own local conditions. Hawaii was the first state to propose a §1332 waiver, and it is a very interesting one because Hawaii already has achieved one of the lowest uninsured rates and some of the lowest premiums in the country. Hawaii seeks to waive the requirement to establish a SHOP purchasing pool for small employers. The state’s rationale was that it’s expensive to establish and very few small employers participated.
Hawaii’s Prepaid Health Care Act requires every employer down to the size of one employee to offer basic coverage. The mandate applies to employees of 20 or more hours. It restricts employee-mandated contributions for employee only coverage to 1.5% of wages. Its minimum actuarial values for employee only coverage are at least 90% (e.g. a 10% copay out of pocket), and for family coverage its minimum actuarial values are 80%. Thus in Hawaii, employers pay less, employees pay less, and they get more coverage.
By contrast, the ACA’s employer requirements are for employers of 50 or more employees (small employers are exempt), for employees working at least 30 hours a week. Minimum coverage is for a 60% actuarial value, and the employer must contribute at least 60%. The ACA’s requirements for employers are far less than in Hawaii – fewer employers must offer, they pay for less of the premium cost and they may offer plans with far higher deductibles and copayment.
Hawaii is seeking to waive the requirements to establish a SHOP purchasing pool for small employers, to waive the requirements that employers offer bronze and silver plans for their employees, and the SHOP’s duty to offer Co-Op and Multi-state plans for small employers. It also seeks to transmute the ACA’s small employer tax credit into a state Premium Supplementation Fund; this would help very small (fewer than eight employees) low wage employers.
Under the ACA, Hawaii has already cut its uninsured rate in half to about 4% -- approximately 50,000 of the state’s 1.4 million residents are now uninsured. Its residents have 43% fewer hospitalizations, 32% fewer ER visits and 10% lower employer premiums.
Prepared by: Lucien Wulsin
Date: 10/3/16