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What GAO Found

The Departments of Health and Human Services (HHS) and Treasury (Treasury; referred to together as the Departments) have established a number of controls in their process for approving state proposals to waive certain provisions of the Patient Protection and Affordable Care Act (PPACA), referred to as 1332 waivers. These controls seek to ensure that approved waivers meet the statutory criteria of preserving health coverage and controlling federal costs. For example, in applying the statutory criteria that a state waiver provide coverage to at least a comparable number of residents and that the benefits be at least as comprehensive and affordable as in the absence of the waiver, HHS and Treasury required that states assess the effect of their waiver proposal not only on the overall population, but also on vulnerable subgroups, such as the elderly. Furthermore, according to departmental guidance, in applying the statutory criteria that the proposed waiver will not increase the federal deficit, the Departments will assess not only federal costs for the waiver but also whether the waiver will increase federal costs for other types of coverage, such as Medicaid. As of May 2016, the Departments had not approved any waivers, with only one state having submitted an application that was under review. Consequently, there were no waivers available to illustrate the types of approvable proposals or how the Departments applied controls.

HHS and Treasury are developing procedures for coordinating during the review and approval process. Officials from both departments stated they are coordinating between and within their departments to help states as they develop the concepts for their waiver proposals. In addition, the Departments issued joint regulations and guidance establishing the high-level roles of the Departments in the waiver review and approval process. As of May 2016, the Departments were in the process of developing more specific procedures for coordinating. For example, officials reported that HHS was developing assessment tools to be used by both Departments during review. Officials also told GAO that the Departments are taking a flexible approach to setting procedures in recognition they may need to evolve as the Departments gain experience with each waiver application submitted.

Why GAO Did This Study

PPACA established section 1332 waivers to allow for state innovation in providing health insurance under PPACA. Under section 1332, states may seek federal approval to waive certain PPACA requirements, including requirements related to health insurance exchanges. HHS and Treasury share responsibility for reviewing and approving 1332 waivers. To receive approval, states are required to meet statutory criteria that the waiver provides coverage to at least a comparable number of state residents as would have received coverage without the waiver, that the coverage is at least as comprehensive and affordable as it would be in the absence of the waiver, and that the waiver will not increase the federal deficit. GAO was asked to examine the status of the Departments’ implementation of the review and approval process for section 1332 waivers. This report provides information on HHS’s and Treasury’s approach to (1) applying the statutory approval criteria and (2) coordinating the review and approval of 1332 waiver proposals across HHS, Treasury, and their related agencies.

To address its objectives, GAO reviewed 2012 federal regulations and 2015 guidance. To supplement this review, GAO interviewed HHS and Treasury officials about their planned approach for assessing state waiver proposals and their procedures for coordinating reviews across the Departments and within their respective agencies.

For more information, contact Katherine Iritani at (202) 512-7114 or

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