Photo: Associated Press

A little-known part of the Patient Protection and Affordable Care Act that goes into effect in 2017 could eventually change how the law works in many states.

Beginning in 2017, Section 1332 will allow the federal government to grant waivers to states allowing them to revise key parts of the law. For example, states could potentially be given the right to get rid of their insurance exchanges or eliminate the individual or employer insurance mandate. Or, states could be authorized to create a single-payer health system, as Vermont tried unsuccessfully to do.

The provision suggests that, despite the common GOP criticism that PPACA is a “federal takeover,” the landmark health law could evolve into a model that resembles what many conservatives have long proposed for other federal programs, such as Medicaid. Many conservatives have long advocated for such programs to be funded via federal block grants that allow states to spend as they see fit.

But the law is clear that waivers aren’t simply a pass for state leaders who want to ditch PPACA. They are intended for states with a good-faith plan to further PPACA’s goal of expanding insurance. States have to show that their proposed changes would cover just as many people as the status quo, and that they would do so without increasing the federal deficit. And certain popular provisions of PPACA are set in stone, such as the protections for those with preexisting conditions.

But much of the implementation and interpretation of Section 1332 is tied to the outcome of the 2016 election.

A Republican president will likely be friendlier to waivers that request significant exemptions from the law, such as the insurance mandate. However, it’s hard to imagine GOP administration granting a state the right to set up a single-payer health care system.  

In a column for the Wall Street Journal, David Blumenthal, president of the Commonwealth Fund, said the waivers “offer tantalizing prospects for would-be ACA reformers across the political spectrum.”

Blumenthal sees a number of potential fixes to the law that states could take the lead on, such as the “family glitch,” which has locked some low and lower-middle income families out of insurance subsidies.

“If the states are the laboratories of democracy, as Justice Louis Brandeis once declared, then Section 1332 of the ACA could open the doors to robust state-driven experimentation with this landmark health care law,” said Blumenthal.