California Democrats are testing the bounds of Obamacare’s “innovation” waiver, pushing to bypass the 2010 law’s ban on illegal immigrants’ participation by letting them purchase insurance on the state’s health care exchange.

Capitol Hill Democrats, who created the ban over fear that allowing illegals to enroll would be too politically charged, now sense a shift in their favor. They say it’s time to let those in the country without authorization buy into Obamacare as long as they cover all the costs themselves.

The California plan is poised to be the first major test for President Obama and his waiver authority. The White House is not tipping its hand, saying it will wait to see an official proposal.

Waivers were written into Section 1332 of the Affordable Care Act as a way to let states experiment on whether they could provide the same level of coverage without having to follow all of the law’s strict rules.

The waivers don’t take effect until next year because the law’s authors wanted to force states to play by the rules at first.

Vermont and Hawaii are the only states to submit waiver requests so far and have requested modest changes to how Obamacare’s small-business exchanges are implemented.

Other states see California as a test.

If California succeeds, “that may signal to some states, ‘Hey, there’s an openness here to thinking a little bit more broadly,’ and we may see then some states moving forward,” said Jennifer Tolbert, director of state health care reform at the nonpartisan Kaiser Family Foundation.

House Minority Leader Nancy Pelosi and fellow California Democrats have begun lobbying the administration to approve the state’s application, even though it probably won’t be submitted until later this month.

They estimate some 17,000 illegal immigrants would buy coverage — at no cost to federal taxpayers — if the rules were changed.

“It will expand access to comprehensive, affordable health care and it will not impact the federal budget deficit,” Mrs. Pelosi and dozens of party colleagues wrote to the Treasury and Health and Human Services secretaries this week. “Plans sold under this program will be identical in every way to plans currently sold through the exchange, and will not be subsidized with federal premium assistance or cost sharing subsidies.”

Republican members of California’s House delegation objected to the plan months ago, saying it would further entrench Obamacare and could pave the way for states that want to subsidize illegal immigrants’ coverage.

Sen. Jeff Sessions, Alabama Republican, said the change would encourage illegal immigration by allowing people who aren’t supposed to be in the country to access safety-net programs.

“People underestimate the clarity and moral authority of law,” he said. “Once you start undermining that clarity, then you get more lawbreakers. And that’s what’s happened on immigration.”

The Health and Human Services Department will judge waiver requests and will give the public a chance to comment.

For now, states are relying on limited information about what is in bounds and what is not. They can waive specific parts of the law, including the individual mandate requiring people to hold insurance, and the employer mandate requiring large companies to provide coverage to full-time employees.

But in doing so, states cannot run afoul of four so-called guardrails: The new model must cover at least as many people as Obamacare, provide coverage that is just as comprehensive as what consumers found on the exchanges, curb out-of-pocket spending in line with the exchange model, and not increase the federal deficit.

Also, states cannot let insurers turn away customers with pre-existing medical conditions.

HHS declined to speculate on whether Mr. Obama would be able to rule on California’s waiver before he leaves office, though analysts said it will be difficult.

At the White House, press secretary Josh Earnest on Wednesday said he hadn’t seen California’s plan, though he rebuked Republicans who have suggested that the administration is stepping back from its pledge to withhold “benefits” from illegal immigrants.

“The way that the Affordable Care Act is currently written, individuals who are undocumented immigrants are not eligible to collect benefits associated with the Affordable Care Act,” Mr. Earnest said. “I know that’s been the subject of some fearmongering, or even outright lying on the part of Republicans.”

Republican distrust extends back to 2009, when Mr. Obama used his State of the Union Address to insist that his forthcoming health care reforms “would not apply to those who are here illegally.”

Rep. Joe Wilson, South Carolina Republican, broke decorum by shouting back, “You lie!”

The issue reared again in 2013, when Congress last debated an immigration overhaul. Some Democrats wanted to extend Obamacare benefits to illegal immigrants but eventually backed down, fearing the fight would damage the overall push for a bill.

California’s health care exchange said it expects a relatively small number of enrollments under the waiver and that most of those are likely to be illegal immigrants who have higher incomes and live in mixed households with legal residents.

Analysts said it is unclear how new enrollees would affect the makeup of the risk pool that determines how much insurers charge. Illegal migrants tended to be younger, which holds rates in check, though they may have pent-up demands for health care services.

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