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Obama Backs Wyden/Brown Legislation to Accelerate State Opt-Out of Health Care

President Obama will announce to the National Governor’s Association today that he supports a measure to allow for a faster state opt-out of the health care law, provided that the states meet certain basic minimum coverage requirements.

The announcement is the first time Mr. Obama has called for changing a central component of his signature health care law, although he has backed removing a specific tax provision that both parties regard as onerous on business. The shift comes as the law is under fierce attack in the courts and from Republicans on Capitol Hill and in statehouses around the country.

The bipartisan amendment that Mr. Obama is now embracing was first proposed in November, eight months after enactment of the Affordable Care Act, by Senators Ron Wyden, Democrat of Oregon, and Scott Brown, Republican of Massachusetts. Senator Mary L. Landrieu of Louisiana, a Democrat, is now a co-sponsor.

The legislation would allow states to opt out earlier from various requirements if they could demonstrate that other methods would allow them to cover as many people, with insurance that is as comprehensive and affordable, as provided by the new law. The changes also must not increase the federal deficit.

This is very good news for states which want to design their own health care plans. Under the old law, states would have to go to the trouble of setting up exchanges and all the other requirements of the federal law, and then wait three years before opting out. Now they can opt-out at the same time the exchanges go into effect, which means they can make their own decisions without having to put the exchanges up first. That just makes sense.

In particular, this could really aid Vermont, which has moved forward with their own single-payer plan but needs waivers from the federal government to put it into action. Accelerating the state opt-out could make single-payer a reality in Vermont.

Other states don’t want to really adopt a new health care system for themselves as much as they want to gut Medicaid and reduce their state’s costs by trimming hundreds of thousands from the rolls. Since half of the coverage advantages from the health care law come from the expansion of Medicaid, I don’t know how this would be acceptable under an Obama Administration. But the Health and Human Services Secretary, Kathleen Sebelius, has been trying to provide a path forward for states to cut their Medicaid costs, mainly by allowing states to shift costs onto beneficiaries.

Allowing states to operate as laboratories for health care makes some sense, but there is a risk that the agency granting the waivers – in current or future Administrations – may lower those requirements needed to substitute their own methods for the federal law.

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David Dayen

David Dayen