Sec. 111. Waivers for State innovation
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/bill/119/s/3389/is/section-111A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
Section 1332 of the Patient Protection and Affordable Care Act ( 42 U.S.C. 18052 ) is amended— in subsection (a)(1)(C), by striking the law and inserting a law or has in effect a certification ; and in subsection (b)(2)— in the paragraph heading, by inserting after or certify ; law in subparagraph (A)— by striking A law and inserting the following: A law ; and by adding at the end the following: A certification described in this paragraph is a document, signed by the Governor of the State, that certifies that such Governor has the authority under existing Federal and State law to take action under this section, including implementation of the State plan under subsection (a)(1)(B). ; and in subparagraph (B)— in the subparagraph heading, by striking ; and of opt out by striking may repeal a law and all that follows through the period at the end and inserting the following:
“may terminate the authority provided under the waiver with respect to the State by— repealing a law described in subparagraph (A)(i); or terminating a certification described in subparagraph (A)(ii), through a certification for such termination signed by the Governor of the State. . Section 1332(a) of the Patient Protection and Affordable Care Act ( 42 U.S.C. 18052(a) ) is amended— in paragraph (3)— in the first sentence— by inserting or would qualify for a reduced portion of after would not qualify for ; by inserting , or the State would not qualify for or would qualify for a reduced portion of basic health program funds under section 1331, after subtitle E ; by inserting , or basic health program funds the State would have received, after this title ; and by inserting or for implementing the basic health program established under section 1331 before the period; in the second sentence, by inserting before the period , and with respect to participation in the basic health program and funds provided to such other States under section 1331 ; and by adding after the second sentence the following:
A State may request that all of, or any portion of, such aggregate amount of such credits, reductions, or funds be paid to the State as described in the first sentence. ; by redesignating paragraphs (4), (5), and
(6)as paragraphs (5), (6), and (7), respectively; and by inserting after paragraph
(3)the following: Not later than 45 days after the date of enactment of the Lowering Health Care Costs for Americans Act , the Secretary, in consultation with the National Association of Insurance Commissioners, shall specify an allocation methodology for determining the amount of funds appropriated under section 2(a)(2)(B) of the Lowering Health Care Costs for Americans Act for a fiscal year to be allocated for each State for purposes of subparagraph
(B)and section 2(a)(2)(C) of the Lowering Health Care Costs for Americans Act . From amounts appropriated under section 2(a)(2)(B) of the Lowering Health Care Costs for Americans Act for a fiscal year, the Secretary shall award grants to States for each of fiscal years 2027 through 2030, in amounts determined in accordance with the allocation methodology under subparagraph (A), for the following purposes: For fiscal year 2027, for administrative costs of the State associated with preparing and submitting information described in subsection (a)(1)(B) that includes an invisible high-risk pool or reinsurance program that meets the requirements of subsection (g)(2), or costs associated with the establishment of such invisible high-risk pool or reinsurance program. For each of fiscal years 2028, 2029, and 2030, for the establishment or maintenance of invisible high-risk pools and reinsurance programs that meet the requirements of subsection (g)(2) and for which the State has received a waiver under this section. Funds awarded to a State under a grant awarded under subparagraph
(B)shall not be taken into account for purposes of determining under paragraph
(1)whether the State waiver is budget neutral, or determining under subsection (b)(1) whether the State waiver increases the Federal deficit. . There are authorized to be appropriated, and there are appropriated, to the Secretary of Health and Human Services, for the purposes described in section 1332(a)(4)(B) of the Patient Protection and Affordable Care Act and subparagraph (C), out of any funds in the Treasury not otherwise appropriated— $500,000,000 for fiscal year 2027; and $5,000,000,000 for each of fiscal years 2028, 2029, and 2030. Amounts appropriated under this paragraph shall remain available until expended. For purposes of plan year 2026, in the case of a State that does not, by a date specified by the Secretary of Health and Human Services (referred to in this paragraph as the Secretary ), in consultation with the National Association of Insurance Commissioners, have in effect a waiver under section 1332 of the Patient Protection and Affordable Care Act ( 42 U.S.C. 18052 ) that includes an invisible high-risk pool or reinsurance program that meets the requirements of subsection (g)(2) of such section 1332, the Secretary shall, from amounts appropriated under subparagraph (B), use the allocation determined for the State under subsection (a)(4)(B) of such section 1332 for plan year 2026 for the purpose described in clause
(ii)for such State. The Secretary shall use any allocation for a State made pursuant to clause
(i)to provide incentives to appropriate entities to enter into arrangements with the State to help stabilize premiums for health insurance coverage in the individual market in such State by providing payments to such appropriate entities using payment parameters and a methodology determined by the Secretary. Section 1332 of the Patient Protection and Affordable Care Act ( 42 U.S.C. 18052 ) is amended— in subsection (a)(1)(C), by striking subsection (b)(2) and inserting subsection (b)(3) ; and in subsection (b)— in paragraph (1)— in subparagraph (B), by striking at least as affordable and inserting of comparable affordability, including for low-income individuals, individuals with serious health needs, and other vulnerable populations, ; and by amending subparagraph
(D)to read as follows: will not increase the Federal deficit over the term of the waiver; and will not increase the Federal deficit over the term of the 10-year budget plan submitted under subsection (a)(1)(B)(ii). ; by redesignating paragraph
(2)(as amended by paragraph (1)) as paragraph (3); and by inserting after paragraph
(1)the following: In determining whether a State plan submitted under subsection
(a)meets the deficit neutrality requirements of paragraph (1)(D), the Secretary may take into consideration the direct budgetary effect of the provisions of such plan on sources of Federal funding other than the funding described in subsection (a)(3). A determination made by the Secretary under subparagraph (A)— shall not be construed to affect any waiver process or standards or terms and conditions in effect on the date of enactment of the Lowering Health Care Costs for Americans Act under title XI, XVIII, XIX, or XXI of the Social Security Act, or any other Federal law relating to the provision of health care items or services; and shall be made without regard to any changes in policy with respect to any waiver process or provision of health care items or services described in clause (i). . Section 1332(d) of the Patient Protection and Affordable Care Act ( 42 U.S.C. 18052(d) ) is amended— in paragraph
(1)by striking 180 and inserting 120 ; and by adding at the end the following: With respect to any application under subsection (a)(1) submitted on or after the date of enactment of the Lowering Health Care Costs for Americans Act or any such application submitted prior to such date of enactment and under review by the Secretary on such date of enactment, the Secretary shall make a determination on such application, using the criteria for approval otherwise applicable under this section, not later than 45 days after the receipt of such application, and shall allow the public notice and comment at the State and Federal levels described under subsection (a)(5) to occur concurrently if such State application— is submitted in response to an urgent situation, with respect to areas in the State that the Secretary determines are at risk for excessive premium increases or having no health plans offered in the applicable health insurance market for the current or following plan year; is for a waiver that is the same or substantially similar to a waiver that the Secretary already has approved for another State; or is for a waiver that includes an invisible high-risk pool or reinsurance program described in subparagraph (A), (B), or
(D)of subsection (g)(2). A waiver approved under the expedited determination process under subparagraph (A)(i) shall be in effect for a period of 3 years, unless the State requests a shorter duration. Subject to the requirements for approval otherwise applicable under this section, not later than 1 year before the expiration of a provisional waiver period described in subclause
(I)with respect to an application described in subparagraph (A)(i), the Secretary shall make a determination on whether to extend the approval of such waiver for the full term of the waiver requested by the State, for a total approval period not to exceed 6 years. The Secretary may request additional information as the Secretary determines appropriate to make such determination. An approval of a waiver under subparagraph (A)(ii) shall be subject to the terms of subsection (e). Not later than 5 years after the date of enactment of the Lowering Health Care Costs for Americans Act , the Comptroller General of the United States shall conduct a review of all waivers approved pursuant to subparagraph (A)(ii) to evaluate whether such waivers met the requirements of subsection (b)(1) and whether the applications should have qualified for such expedited process. . Section 1332(e) of the Patient Protection and Affordable Care Act ( 42 U.S.C. 18052(e) ) is amended by striking No waiver and all that follows through the period at the end and inserting the following: “A waiver under this section— shall be in effect for a period of 6 years unless the State requests a shorter duration; may be renewed, subject to the State meeting the criteria for approval otherwise applicable under this section, for unlimited additional 6-year periods upon application by the State; and may not be suspended or terminated, in whole or in part, by the Secretary at any time before the date of expiration of the waiver period (including any renewal period under paragraph (2)), unless the Secretary determines that the State materially failed to comply with the terms and conditions of the waiver. . Section 1332 of the Patient Protection and Affordable Care Act ( 42 U.S.C. 18052 ) is amended— by adding at the end the following: With respect to carrying out this section, the Secretary shall— issue guidance, not later than 60 days after the date of enactment of the Lowering Health Care Costs for Americans Act , that includes initial examples of model State plans that meet the requirements for approval under this section; and periodically review the guidance issued under subparagraph
(A)and, when appropriate, issue additional examples of model State plans that meet the requirements for approval under this section, which may include— State plans establishing reinsurance or invisible high-risk pool arrangements for purposes of covering the cost of high-risk individuals; State plans expanding insurer participation, access to affordable health plans, network adequacy, and health plan options over the entire applicable health insurance market in the State; waivers encouraging or requiring health plans in such State to deploy value-based insurance designs which structure enrollee cost-sharing and other health plan design elements to encourage enrollees to consume high-value clinical services; State plans allowing for significant variation in health plan benefit design; or any other State plan as the Secretary determines appropriate. Beginning on the date of enactment of the Lowering Health Care Costs for Americans Act , the regulations promulgated and the guidance issued under this section prior to the date of enactment of the Lowering Health Care Costs for Americans Act shall have no force or effect. ; and in subsection (a)(5) (as redesignated by paragraph (2)(A)(ii))— in subparagraph (A), by inserting , as applicable before the period; and in subparagraph (B), by striking Not later than 180 days after the date of enactment of this Act, the Secretary shall and inserting The Secretary may . Section 1332 of the Patient Protection and Affordable Care Act ( 42 U.S.C. 18052 ), as amended by paragraph (6), is further amended by adding at the end the following: With respect to a State that has received a waiver under this section to establish an invisible high-risk pool or reinsurance program described in paragraph (2), the State may fund such program, in whole or in part, using one or both of the following: Amounts received through a grant described in subsection (a)(4)(B). All of, or a portion of, the payments made to the State as described in subsection (a)(3), consistent with the information the State provides under subsection (a)(1)(B). An invisible high-risk pool or reinsurance program described in this paragraph is a program that meets any of the following: An invisible high-risk pool, as defined by the State, under which health insurance issuers, with respect to designated individuals who experience higher than average health costs as determined by the State, and are enrolled in health insurance coverage offered in the individual market, cede risk to the pool, without affecting the premium paid by the designated individuals or their terms of coverage. With respect to such pool, the State, or an entity operating the pool on behalf of the State, shall establish— the premium amount the ceding issuer shall pay to the reinsurance pool; the applicable attachment points or coinsurance percentages if the ceding issuer retains any portion of the risk under ceded policies; and the mechanism by which high-risk individuals are designated for cession to the pool, which may include a list of designated high-cost health conditions. A reinsurance program, as defined by the State, that assumes a portion of the risk for individuals who experience higher than average health costs, as determined by the State, in a manner substantially similar to the reinsurance program that operated in the State in accordance with section 1341. A reinsurance program established by the State not otherwise described in this paragraph. A program based on another State’s reinsurance program— described in subparagraph (A), (B), or (C), for which an application has been approved under this subsection; or which was implemented prior to September 1, 2025, and which the Secretary determines meets the requirements of subparagraph (A). . The amendments made by this Act to section 1332 of the Patient Protection and Affordable Care Act ( 42 U.S.C. 18052 )— with respect to applications for waivers under such section 1332 submitted after the date of enactment of this Act and applications for such waivers submitted prior to such date of enactment and under review by the Secretary on the date of enactment, shall take effect on the date of enactment of this Act; and with respect to applications for waivers approved under such section 1332 before the date of enactment of this Act, shall not require reconsideration of whether such applications meet the requirements of such section 1332, except that, at the request of a State, the Secretary shall recalculate the amount of funding provided under subsection (a)(3) of such section. Section 1332(a)(1)(B) of the Patient Protection and Affordable Care Act ( 42 U.S.C. 18052(a)(1)(B) ) is amended— in clause (i), by inserting , including, as applicable, a description of the State’s plan to use any amounts awarded to the State under paragraph
(4)to support an invisible high-risk pool or reinsurance program consistent with subsection
(g)and such information about such program as the Secretary may require before the semicolon; and in clause (ii), by inserting over both the term of the proposed waiver and the term of the 10-year budget plan after Government .
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Sec. 111
Waivers for State innovation
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