Big Waiver Under Statutory Sabotage

Abstract

The Affordable Care Act’s State Innovation waiver allows federal agencies to suspend the most controversial parts of the statute for states to pursue alternative paths, while keeping the federal funding provided by the statute. This “big waiver” provision has the potential to enable states to pursue transformative health reforms, while preserving the affordability and universal coverage aims of the federal statute. Big waivers like this one carry theoretical promise, which largely depends on the strength of the federal statute’s baseline infrastructure. This Essay considers early implementation of the State Innovation waiver as a test for big waiver theory – and for cooperative federalism in health reform.

The fragmentation of the Affordable Care Act through litigation, legislation, and executive challenge has complicated both the State Innovation waiver’s intended implementation, and the theoretical promises of big waiver. Most recently, the administering agency’s new guidance stretches the ACA’s already-sizeable waiver beyond its statutory guardrails, even changing its aspirational title from “State Innovation” to “State Relief and Empowerment.” The embrace of the ACA’s big waiver by an administration hostile to the enduring statute suggests that the threats of big waiver swallowing its housing statute are real, and that the waiver may be wielded not as an instrument of innovation, but one of further fragmentation.

Keywords: Affordable Care Act, ACA, Waiver, State Innovation, Big Waiver, Cooperative Federalism

JEL Classification: I13