This bill amends the Affordable Care Act by adding a new Section 1335 that authorizes States to apply for a waiver to implement comprehensive, publicly administered universal health care systems. States can request waiver authority over a specific list of federal statutes and programs (including major Medicare, Medicaid, CHIP, FEHB, TRICARE, and certain tax credits) and must submit a 10‑fiscal‑year, Federal budget‑neutral plan and a five‑year strategy to reach at least 95 percent coverage.
The measure matters because it creates a clear, statutory pathway for States to consolidate multiple federal funding streams into an annual passthrough payment, reinvest any savings, and operate a state‑level universal plan while preserving specified consumer protections (appeals, access standards, reproductive and gender‑affirming care, and special rules for American Indian/Alaska Native beneficiaries). It also builds an independent advisory Panel and an interagency coordination requirement to govern approvals and oversight.
At a Glance
What It Does
The bill creates a new waiver—Section 1335—that lets a State assume responsibility for specified federal health programs and related subsidies and receive an annually determined passthrough payment equal to what the federal government would otherwise spend (adjusted for caseload growth and health inflation). The Secretary (and other agency heads for program‑specific authorities) must approve applications that demonstrate coverage equivalence and public administration.
Who It Affects
State governments seeking universal coverage, beneficiaries of Medicare, Medicaid, CHIP, FEHB, and TRICARE in participating States, private insurers and issuers offering supplemental coverage, health care providers and labor organizations, and tribal health programs and urban Indian organizations.
Why It Matters
If used, the waiver would shift administration and funding flows for major federal health programs to States, allow reinvestment of identified savings locally, and reshape private insurance markets and provider contracting in affected States. It also establishes administrative and reporting tests (95% coverage target; independent 5‑year review) that condition continued waiver authority.
More articles like this one.
A weekly email with all the latest developments on this topic.
What This Bill Actually Does
The bill inserts a new Section 1335 into the ACA that creates a dedicated waiver route for States to operate a comprehensive, publicly administered universal health care plan. To apply, a State must submit enabling State law or an executive order, a description of the program and implementing authority, a ten‑year budget plan that the State certifies is budget‑neutral for the federal government, and a five‑year strategy showing how the State will reach at least 95 percent coverage.
Applications must disclose which federal requirements the State seeks to waive and how the State’s plan will meet the statutory protections in the bill.
If approved, the Secretary (or the relevant agency head for program‑specific authorities) will not expend federal funds directly for the covered programs for the waiver period but must provide an annual aggregate passthrough payment equal to what the federal government would otherwise have spent for those residents, adjusted for caseload growth and health‑care inflation; the State can reinvest any savings into covered services. The waiver can cover multiple federal programs at once (Medicare, Medicaid, CHIP, FEHB, TRICARE, Exchange subsidies, and specified tax credits), and two or more States may submit a regional joint application.The statute requires public notice and comment modeled on Medicaid section 1115 waiver practice, mandates that approved plans be publicly administered (though contracting with private entities is allowed), and preserves systems for complaints, appeals, and independent review.
The law requires coverage of reproductive health (including abortion), contraception, and gender‑affirming care, and it contains specific protections for American Indian and Alaska Native beneficiaries—prohibiting cost‑sharing, requiring contracting efforts with Indian health care providers, and calling for consultation mechanisms. A new Independent Assessment Panel reviews applications and reports to the Secretary and Congress, and an interagency memorandum of understanding must be negotiated among relevant federal agencies to coordinate waiver review and implementation.
The Five Things You Need to Know
The waiver explicitly lists the federal requirements that may be waived (e.g.
ACA sections 1301–1324 and 1402; IRC §36B and §4980H; Social Security Act titles XVIII, XIX, XXI; FEHB (5 U.S.C. ch. 89); TRICARE (10 U.S.C. ch. 55); and ERISA §514).
Applicants must include a 10‑fiscal‑year budget plan that the State certifies is budget‑neutral for the Federal Government; the Secretary will determine and pay an annual passthrough equal to federal spending projected for covered residents (adjusted for caseload growth and health inflation).
The State must aim to insure at least 95% of residents within 5 years; waiver continuation depends on independent 5‑year reports and, if the threshold is not met, a 12‑month grace period precedes possible termination.
Approved plans must be publicly administered (State agency or independent public entity), provide protections at least as good as the specified federal programs (appeals, access, cost‑sharing limits), and must cover reproductive and gender‑affirming care; States may still allow supplemental private insurance for non‑covered benefits.
An 11‑member Independent Assessment Panel (statutorily defined stakeholder mix) reviews applications and reports; regulatory guidance is required within 180 days and the Secretary must make a decision within 90 days of receiving the Panel’s recommendations.
Section-by-Section Breakdown
Every bill we cover gets an analysis of its key sections.
Short title and purpose
This short section names the Act and states its purpose: to create a flexible framework for States to provide comprehensive universal coverage. Practically, this sets the statutory intent that subsequent provisions are permissive and designed to facilitate State experimentation rather than mandate a single national model.
What States must submit to apply
This subsection requires a State to file an application describing the enabling State law or authority, a five‑year plan to reach 95% coverage, and a detailed 10‑year budget plan that is budget‑neutral for the federal government. The practical effect is to force States to do upfront actuarial and legal work—mapping resident populations, crosswalking benefits between federal programs and the proposed State plan, and producing a fiscal projection sufficient for federal review.
Standards the Secretary must use to approve waivers
The Secretary must find that the State’s plan is at least as comprehensive and affordable (cost‑sharing protections) as the federal programs replaced for the applicable residents, will cover all residents (with limited exceptions), is publicly administered, and preserves appeals and access mechanisms. This provision operationalizes the statutory floor of consumer protections that a State plan must meet, which constrains States even when waiving multiple federal requirements.
Limits on waiver scope and periodic review
The statute limits waivable federal law to the enumerated list and requires the Secretary to set the scope of any waiver. Applications receive Panel review and a decision timeline tied to that Panel (90 days after Panel recommendations); the State must produce independent 5‑year reports, triggering a review and a potential 12‑month corrective period if the 95% coverage goal is unmet. These mechanics create a recurring accountability cycle and a defined cadence for evaluating whether a State’s model is delivering on coverage goals.
Single application and coordinated federal review
An interagency MOU among HHS, Treasury, Defense, Labor, and OPM is required within 180 days to allow a single application to cover multiple federal authorities and to harmonize regulations and interpretations. For operators this means centralized review and a single point of entry, but also that multiple federal agencies retain jurisdictional roles—introducing potential coordination challenges and political tradeoffs in implementation.
Advisory panel composition and role
The bill creates an 11‑member Panel that receives every application, must deliver recommendations within 90 days, and reports annually to Congress. Membership mixes federal appointees (via congressional and governors’ recommendations), labor, patient advocates, primary care physicians, and rural health reps. The Panel is advisory but central to the review rhythm; its composition embeds stakeholder voices but also creates points of contest over makeup and influence.
Special rules for American Indian/Alaska Native beneficiaries and operational definitions
The statute requires HHS guidance to protect Indian beneficiaries: no cost‑sharing, continued access to IHS services, contracting expectations, and government‑to‑government consultation. The definitions subsection clarifies 'resident', 'health benefits coverage', and which federal programs are 'specified'—these operational definitions determine who is covered, what counts as an equivalent benefit, and which federal funds are eligible to be passed through.
This bill is one of many.
Codify tracks hundreds of bills on Healthcare across all five countries.
Explore Healthcare in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- State governments: Gain authority to consolidate multiple federal funding streams into a single annual passthrough and direct how savings are reinvested locally, giving them fiscal and programmatic control to design universal plans.
- Uninsured and underinsured residents in participating States: Stand to gain broader coverage, guaranteed inclusion of reproductive and gender‑affirming care, and protections on appeals and access if the State meets the statutory standards.
- Public sector health workers and labor organizations: Benefit from statutory recognition on the Independent Assessment Panel and from opportunities created by publicly administered plans to shape staffing, contracting, and payment reforms.
- Tribes and urban Indian programs: Receive explicit protections—no cost‑sharing, mandated contracting efforts, and consultation processes intended to preserve Indian health care access under a State plan.
Who Bears the Cost
- State fiscal authorities and taxpayers: Even with a Federal passthrough, States carry the implementation, transition, and potential overrun risk if projected savings or federal passthroughs fall short or if the State’s budget projections prove optimistic.
- Private insurers and issuers of comprehensive plans: Face potential contraction of their markets in participating States as a publicly administered system assumes core coverage—insurers will need to adapt by offering supplemental products or exit markets.
- Federal agencies (HHS, Treasury, DOD, OPM, Labor): Will bear coordination, regulatory, and oversight burdens; the statute creates new interagency processes and reporting obligations that require staff time and technical capacity.
- Health care providers: May face payment model shifts, new contracting regimes, and administrative changes when a State centralizes payment flows; smaller or specialty providers could see revenue disruption depending on state payment rates and contracting decisions.
Key Issues
The Core Tension
The bill’s core dilemma is tension between state flexibility to design a consolidated, publicly administered universal system—and the federal interest in preserving entitlements, uniform protections, and predictable federal fiscal exposure. Granting States broad waiver authority and passthrough funds encourages innovation and local tailoring, but it risks uneven benefit floors, contested funding baselines, and transitional disruptions for beneficiaries and providers if the mechanics of passthrough payments, benefit equivalence, and interjurisdictional responsibilities are not precisely defined.
The bill creates substantial flexibility for States but leaves key implementation details to regulation and interagency agreement. The annual passthrough payment is to equal federal spending ‘as determined by the Secretary’ and adjusted for caseload growth and health inflation; the statute does not prescribe the precise actuarial methodology or dispute resolution mechanism if a State and federal government disagree about the baseline or adjustments.
That creates potential litigation or negotiation points and raises transition‑year cash‑flow risk for States that must stand up new systems before full passthrough clarity is reached.
The statute requires coverage equivalence and preserves several consumer protections, but permitting waiver of many federal requirements at once raises questions about which discrete legal protections survive in practice (for example, how ERISA preemption and ERISA‑covered employer plan interactions will be managed, or how retroactive Medicaid coverage requirements translate into a State universal plan). Although the Independent Assessment Panel is central to review, it is advisory; the Secretary and multiple agency heads retain final authority, which can produce mixed signals if agency priorities diverge.
Finally, the bill’s tribal rules strengthen protections for American Indians and Alaska Natives, but operationalizing government‑to‑government consultation and ensuring adequate payment rates to Indian health providers could be complex and resource‑intensive.
Try it yourself.
Ask a question in plain English, or pick a topic below. Results in seconds.