Semper Reformanda

Two anniversaries came to mind this week—a fifth and a 500th.

Obamacare celebrated its fifth anniversary on Monday.

But its really big year won’t come until 2017, when key parts of the law phase in and out, and a little-known provision of the law opens up the floodgates for states to try their own version of health reform.

2017 is also the year, by the way, when Protestants will celebrate the 500th anniversary of Martin Luther’s launch of the Reformation. A common phase among Protestants—and other reformers of many stripes—is semper reformanda, which means “always being reformed.”

That’s an apt tagline for Obamacare, too.

Dhan Shapurji, a Deloitte consultant to health insurers and hospital systems, told me over coffee a few weeks ago that 2017 will really be the first year that we will be able to get a sense of what Obamacare has and hasn’t done to our health care system.

Why? Because it won’t be until the end of 2016 that employers of all sizes must end their pre-Obamacare health plans. That means, in the meantime, large numbers of relatively young and healthy workers at small employers remain outside the Obamacare risk pools, which is pushing up premiums for those buying individual insurance in the Obamacare exchanges.

Also, 2017 will be the last year in which employers with “Cadillac” health plans can avoid Obamacare’s 40 percent tax on what it deems excess health benefits. Employers have been reducing the richness of their benefits to avoid that tax.

Finally, in 2017, two of Obamacare’s protections against sky-high losses for insurers selling policies in the exchanges will go away. These are known as reinsurance and risk corridors. Only then, Shapurji said, will we know the true cost of Obamacare policies.

But that same year, Obamacare could also be reworked all over again.

In 2017, a little-discussed vision of Obamacare kicks in, which will allow state governments to request waivers from the federal government to implement new ways to expand insurance coverage in their states.

Waivers have long existed in the Medicaid program. It’s what allowed Indiana to use Medicaid funds to create the healthy Indiana Plan that gave health savings accounts to low-income Hoosiers.

Obamacare extends the same concept to itself, allowing states to get rid of the individual and employer mandate taxes that punish the lack of health insurance, as well as the tax credits and exchanges encourage health coverage. States can also change the specific coverage requirements mandated by Obamacare.

The catch to these waivers—known as Section 1332 waivers or Wyden waivers or, simply, 2017 waivers—is that states must ensure that at least as many remain insured as before the waiver is granted, that coverage remains at least as affordable and comprehensive a before, and that the state’s plan doesn’t add to the federal budget.

The Obama administration has yet to issue detailed regulations on these waivers, so it’s not entirely clear what states could and could not do.

But already Vermont has looked at the 2017 waivers as a ay to implement a single-payer health plan there. Also, elected officials in Arkansas, Hawaii, Massachusetts and Minnesota have looked into it.

State health policy consultant Seema Verma wrote to me in an e-mail that "the waivers are just in the back of everyone's mind." She expects momentum toward actually using them to pick up around the end of this year.

Verma said nothing about Indiana, where she has helped to create the healthy Indiana Plan in 2007 and its expanded offshoot, HIP 2.0, this year. That plan was viewed by many as the most conservative alteration to date of Obamacare’s proposed expansion of Medicaid.

Christy Denault, a spokeswoman for Gov. Mike Pence, declined to offer any thoughts on whether the Pence administration is looking at using the 2017 waivers in a similar way as it used the Medicaid waivers to crate HIP 2.0.

But Republicans in Congress certainly want states to tinker with Obamacare—in fact, they don’t even want states to have to apply for waivers to start implementing their own version of health reform.

The proposal that Republicans are coalescing around—known as the Burr-Hatch-Upton proposal—would make nearly all insurance regulations and decisions about tax subsidies revert to the states. (It would keep Obamacare’s prohibition on insurers rejecting patients based on pre-existing conditions, as well as a relaxed version of Obamacare’s community rating rules.)

An outline of this plan issued earlier this month described it as giving states an “off-ramp” from Obamacare.

What’s the Republicans’ plan for implementing this plan? A story in the National Journal this week laid it out for us: First, Republicans assume the U.S. Supreme Court will invalidate Obamacare’s tax credits for states, like Indiana, that rely on the federal government to run their individual insurance exchange.

Republicans in Congress plan to step in at that point with legislation that authorizes those tax credits—but only for anyone who had Obamacare coverage before the Supreme Court ruling. That would prevent chaos in the exchanges but would also prevent them from growing.

Then Republicans hope to recapture both houses of Congress and have a Republican win the presidency. Then they will be able to put the Burr-Hatch-Upton plan into action in, you guessed it, 2017.

If successful, then we’ll be on our way to having not just one Obamacare, but 50 versions of health reform.

Like I said: semper reformanda.

Please enable JavaScript to view this content.

Editor's note: IBJ is now using a new comment system. Your Disqus account will no longer work on the IBJ site. Instead, you can leave a comment on stories by signing in to your IBJ account. If you have not registered, please sign up for a free account now. Past comments are not currently showing up on stories, but they will be added in the coming weeks. Please note our updated comment policy that will govern how comments are moderated.