On the narrowest of margins, the House of Representatives on May 4 passed the American Health Care Act (AHCA) in its effort to “repeal and replace” the Affordable Care Act (ACA, or Obamacare). The measure now goes to the Senate, which has vowed to rewrite it.

The AHCA does away with both the individual and employer mandates to buy insurance and replaces health insurance subsidies with tax credits. It also affords states great flexibility in departing from existing health care laws by offering waivers.

If states, for instance, choose not to force insurers to cover people with pre-existing conditions, they can exercise a waiver and then take advantage of $120 billion in federal funds set up under the AHCA for high-risk pools to cover individuals with pre-existing conditions.

States can also seek waivers to establish their own range of benefits covered under health policies, departing from the 10 “essential benefits” required under the ACA.

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