States such as Vermont will be able to use an escape clause in U.S. rules issued today to set up their own government-run medical systems and avoid federal mandates in the 2010 healthcare law.
The rules allow states to dodge provisions that have sparked debate, such as a mandate that most Americans purchase insurance, if they match or exceed the law’s expansion of healthcare coverage and maintain consumer protections.
President Barack Obama’s administration proposed rules in March outlining how states would apply to get out of the law. Final rules issued today contain only one significant change: a requirement that states submit time lines for implementation of their proposed replacement plans.
Democratic Vermont Gov. Peter Shumlin has said that he plans for the state to insure all of its residents, creating a single-payer system that would put private health plans such as those run by Cigna Inc. out of business. Oregon’s governor, John Kitzhaber, also a Democrat, has said he wants his state to run a health plan that would compete with private insurers.
The clause “provides states with additional flexibility to improve healthcare for their citizens in a way that works for them while retaining the basic protections” of the federal law, the U.S. Department of Health and Human Services said.
The law requires states to set up new marketplaces called exchanges to sell private insurance at subsidized rates beginning in 2014. It allows states opt out of the exchanges in 2017, if they come up with a replacement plan that will cover as many people at no greater cost.
Democratic senators from Vermont, Oregon, and Massachusetts have proposed legislation that would let states opt out of the health law in 2014, when the exchanges are due to open, instead of 2017. The Obama administration supports the change.
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