Less coverage. Fewer protections. Higher costs. This is essentially what Idaho is proposing in a new waiver application, seeking permission from the administration to shift people from Medicaid to ACA Marketplace coverage, while still requiring enrollees to comply with Medicaid-specific rules including new work requirements. If approved, thousands of Idahoans would face higher out-of-pocket costs and a much more limited benefits package. It could also prompt other states to do the same, further undermining the ACA Medicaid expansion which provides comprehensive health care to some 21 million low income adults nation-wide, including people with chronic conditions, parents and caregivers, and more.
Last month, the Centers for Medicare & Medicaid Services (CMS) notified Idaho that its pending Covered Choice waiver had passed an initial level of federal review and could proceed to the final stage of the waiver application process. This proposal, under Section 1332 of the ACA, is nearly identical to one that was rejected at the same stage by the first Trump Administration in 2019, and would allow individuals otherwise eligible for Medicaid expansion with incomes between 100-138% Federal Poverty Level to enroll in a private Qualified Health Plan (QHP) with premium tax credits (PTC).
Section 1332 of the Affordable Care Act (ACA) created “State Innovation Waivers” that authorize the Secretary of Health and Human Services (HHS) to waive specific provisions of the ACA to allow states to “pursue innovative strategies for providing their residents with access to higher value, more affordable health coverage.”
In order to approve a waiver request, the Secretary of HHS and the Secretary of the Treasury must determine that a state has met rigorous standards intended to ensure that waivers uphold the core tenets of the ACA to preserve and expand access to affordable health coverage. These provisions have come to be known as the four “guardrails” of section 1332:
- The waiver must provide coverage that is at least as comprehensive and affordable as coverage provided without the waiver;
- The waiver must provide coverage to a comparable number of residents as would have coverage without the waiver; and
- The waiver must not increase the federal deficit.
State Innovation Waivers are limited to the parts of the ACA enumerated in section 1332, and cannot be used to waive other laws, including Medicaid requirements. CMS must issue its final approval or denial within 180 days of the date of the determination of completeness, or mid-October 2026 for Idaho’s proposal.
Why would the state pursue such a program? Medicaid opponents in the Idaho legislature have repeatedly threatened to repeal the state’s Medicaid expansion, although advocates have so far successfully thwarted those efforts. State leadership may now be turning to section 1332 to shrink Medicaid expansion under the guise of a Marketplace waiver program. And, like every other state, Idaho is struggling to close budget holes created by the so-called One Big Beautiful Bill Act. While the federal government’s 90% match covers the lion’s share of Medicaid expansion costs, transitioning these beneficiaries into a private QHP would mean that the state would not contribute a penny to their coverage, which would instead be paid by enrollee premiums and cost-sharing and federal PTCs.
As NHeLP noted in its public comments on the waiver application, the Covered Choice waiver is rife with legal gaps and misinformation. The proposal pushes the boundaries of 1332 waiver authority well past their breaking point. The state frames the program as a straightforward expansion of eligibility for QHPs and PTCs, but waiver participants remain, fundamentally, Medicaid beneficiaries. Covered Choice enrollees would be required to apply and be found eligible for Medicaid and then, even while they are enrolled in private health coverage, would still be required to adhere to Medicaid-specific rules, including work requirements, six-month redeterminations, and Medicaid estate recovery requirements. Meanwhile, these enrollees would forgo the due process protections, comprehensive benefits, and lower costs that set Medicaid apart from other forms of health coverage.
For example, Idaho Medicaid provides coverage for an array of services that are not covered in the state’s benchmark plan, including Early and Periodic Screening, Diagnostic, and Treatment services (EPSDT) for people up to age 21, long-term services and supports (LTSS), non-emergency medical transportation (NEMT), adult dental coverage, and far more expansive prescription drug and behavioral health coverage. Moreover, while Medicaid expansion enrollees in Idaho pay no premiums and are protected by a cost-sharing cap of no more than 5% of actual monthly income, Covered Choice enrollees would be enrolled into QHPs that, even with PTCs and cost-sharing reductions, would require monthly premiums and impose cost-sharing set by plans, subject to out-of-pocket limits that could reach $8,000 for a family plan in 2027.
In other words, Covered Choice enrollees would have the worst of both worlds: less comprehensive, more costly QHP coverage paired with post-OBBBA eligibility barriers like work requirements. Not only does this violate the guardrails of comprehensiveness, affordability, and coverage, it twists a Marketplace waiver program into a tool for erasing Medicaid protections.
The first Trump Administration issued guidance and rulemaking that substantially diminished the section 1332 consumer protections and guardrails, although these changes were never fully implemented. The current Administration has yet to formally propose changes to the regulations implementing section 1332. But CMS leadership has publicly expressed an interest in revisiting another, closely-related ACA waiver, and section 1332 may not be far behind. If the Covered Choice application is ultimately approved, it may be a sign of sweeping and harmful regulatory changes that could affect Medicaid enrollees far outside of Idaho’s borders.
Idaho’s decision to re-submit a failed proposal that violates statutory and regulatory requirements is troubling. But CMS’s apparent willingness to entertain the state’s application, despite rejecting it the first time around, is even more concerning. By deeming the application “complete” and flagging it on to the final stage of consideration, CMS may be indicating an even more expansive view of section 1332 than was pushed during the first Trump Administration and one that could allow states to use section 1332 to place Medicaid beneficiaries at significant risk of losing coverage.
