People are starting to get excited about another ObamaCare work-around: The section 1332 waiver. This refers to a section of ObamaCare that allows states great flexibility in how they deliver ObamaCare within their borders. The curious thing about section 1332 waivers is that they can only be issued as of January 1, 2017.

Why? Why not allow states to get section 1332 waivers as of October 2010, when ObamaCare’s first regulations took effect? Or January 2014, when the gushers of tax credits began to flow through the exchanges? Who knows? Maybe the administration just thought they needed a few years for the cement around ObamaCare to solidify.

Newt Gingrich and Tom Daschle have co-authored a report on how states can use section 1332 waivers to execute policy preferences either to the left or the right of ObamaCare. Anne Phelps of Deloitte & Touche LLP has also written a report describing the benefits of using a section 1332 waiver.

Unfortunately, while many 2016 presidential candidates have backed the “repeal” part of the “repeal and replace” equation, few have addressed how they would start over.

They would do well to follow the advice of The Heritage Foundation. The think tank’s soon-to-be-released policy handbook for candidates, Solutions 2016, lays out the “then what” reforms candidates should be talking about:

  • Remove regulatory and policy obstacles that discourage choice and competition.
  • Encourage personal ownership of health care by reforming the tax treatment of health care.
  • Transform health care coverage for low-income Americans by reforming Medicaid as a true safety net and glide path out of poverty.
  • Modernize Medicare program to meet the demographic, fiscal, and structural challenges that threaten to bankrupt the system.

President Obama’s Final Budget Proposal includes:

MEDICAID EXPANSION

The budget will include three years of federal funding to 19 state governments that passed up an earlier offer to expand Medicaid coverage for more than 4 million low-income people.

TWEAK TO “CADILLAC TAX”

Obama will ask for tweaks to a tax on certain health insurance plans that is unpopular with labor unions.

Oklahoma declined to set up an insurance exchange or to expand its Medicaid program, which has some of the nation’s most restrictive eligibility criteria. State officials say the number of private insurers participating on the federal insurance exchange here has fallen, and the premiums of the insurance plans on offer have increased.

The public’s attitude can also be an obstacle: Supporters of the Affordable Care Act often encounter stony skepticism here.

“‘Obamacare’ is a cuss word in this state,” said former Gov. David Walters, a Democrat.

Six out of 10 registered voters support “low income subsidies for health insurance.”

A smaller proportion (45%) believe states should expand Medicaid to people who work but are too poor to buy insurance.

Even fewer voters (41%) approve of President Obama’s idea to extend “start-up” benefits to states that haven’t yet expanded Medicaid.

In the wake of Louisiana governor John Bel Edwards’ announcement last week that his state would expand Medicaid under ObamaCare, the White House rolled out a new scheme to persuade the 19 states that are still holding out to fall into line and expand their programs: throw more money at them.

But these state officials should resist the temptation, for at least three reasons:

  1. First and most obvious is that expansion states have all experienced the same thing: More people signed up than expected, and it blew a hole in the states’ budgets.
  2. The second reason is that there’s no such thing as “free” federal dollars. The money comes with conditions, which effectively shifts policymaking from the receiving state’s legislature and governor to a distant federal bureaucracy (in this case, the Centers for Medicare & Medicaid Services), which dictates how states must spend federal Medicaid funds.
  3. The third reason is less abstract: Medicaid will harm those it’s meant to help. Often lost in the expansion debate is that Medicaid is the worst form of health coverage in the country.

The decision states face of whether to expand Medicaid to non-disabled, working-age, childless adults—the Affordable Care Act primary expansion population—involves tradeoffs. These tradeoffs include higher taxes, reduced spending on items like education, transportation, or infrastructure, or reduced spending on other Medicaid populations such as the disabled, children, or the elderly. The ACA funding formula allows states to pass a much greater share of the costs of covering non-disabled childless adults to federal taxpayers, but the tradeoffs still exist.

President Obama is proposing to boost federal funding for states that choose to expand Medicaid under ObamaCare in a new effort to entice states to make the move.

Obama will propose in his 2017 budget to have the federal government pick up the entire cost of expansion for three years, no matter when a state decides to accept the expansion.

Under current law, states only got three years of full federal funding if they accepted the expansion in 2014. If nothing changes, states newly accepting the expansion would not get full federal funding after 2016 and instead would get payments that are somewhat less, eventually dialing back to 90% of costs.

A recent about-face by the Obama administration on so-called “state innovation waivers” may be the most important change to ObamaCare that no one is paying attention to. These waivers, which will begin in 2017, allow states to take a block grant of funding and waive nearly every major component of the law. A major change, however, is now set to make these experiments mostly impossible. In recent guidance, stealthily released at the close of business on a Friday last month, the Department of Health and Human Services announced that the rules are changing.

Wyoming Gov. Matt Mead announced last month that he would spend the next few months advocating for ObamaCare’s Medicaid expansion in next year’s budget. But so far, Wyoming legislators have taken a thoughtful approach, carefully reviewing all of the evidence and ultimately rejecting ObamaCare expansion. Just 26 out of 90 lawmakers supported the issue during the last legislative session. With expansion costs exploding in other states and federal funding now on the chopping block, it’s clear that their decision was the right one.