3 Areas States Should Consider in Health Care Reform
By Mary Branham, CSG Managing Editor
With a Jan. 1, 2014, deadline looming for implementation of the federal Affordable Care Act, states are at different places in getting ready for health care reform.
While two years seems like a long time to reach that target, the many steps states need to take to address the requirements of the federal legislation passed in 2009 may actually narrow that window of opportunity for action, according to Jennifer Tolbert, associate director with the Kaiser Commission on Medicaid and the Uninsured, a major initiative of the Kaiser Family Foundation, which provides information and analysis on health care coverage and access for low-income populations.
“Some states are moving ahead fairly quickly either with setting up exchanges, preparing their Medicaid program for expansion or undertaking other activities to get ready for health reform, while other states are not moving as quickly,” she said.
The legal challenges to health care reform may be slowing some states from taking action, she said, but with the U.S. Supreme Court likely to rule on at least parts of the bill this spring, that could prompt more state action.
Tolbert said states should be taking action in three primary areas—health care exchanges, Medicaid expansion and private market insurance reforms.
Health Insurance Exchanges
Two states—California and Maryland—have moved fairly quickly on the reform overall, and the health insurance exchanges in particular. Both states have passed legislation to establish exchanges and the appointed boards of directors are meeting on a regular basis. Both states have received establishment grants to set up exchanges.
Other states have taken little to no action with regard to exchanges, and that could create problems down the road, Tolbert said. Exchanges are intended to create a more organized and competitive market for health insurance by offering a choice of plans, establishing common rules regarding the offering and pricing of insurance, and providing information to help consumers better understand the options available to them, according to Kaiser.
“For states that have chosen not to move forward, awaiting resolution of these legal challenges, that puts them effectively two years behind in the planning process,” Tolbert said. “It would likely be difficult for states, unless they have been laying the groundwork, to enact legislation to establish an exchange during the 2012 legislative session.”
Without that enacting legislation, Tolbert said, states can’t make the critical decisions necessary around how the exchange will function.
“That means many of these states will be looking at passing legislation in 2013, which seems to suggest that they will not likely be ready to operate an exchange, a fully functional exchange, by Jan. 1, 2014.”
If that happens, the federal government will step in and operate the exchange, she said.
The Medicaid program will be expanded in 2014 to cover all adults and children up to 133 percent of the federal poverty level. Technically, Tolbert said, because of the 5 percent disregard, the program will cover up to 138 percent of the federal poverty level.
While states are used to making changes in their Medicaid programs, a lot of work remains to expand the program.
“There’s a fair amount of heavy lifting that needs to be done in the Medicaid program to get the programs ready to accept new enrollees that are expected to come onto the program and to streamline their eligibility systems to meet the new federal requirements,” said Tolbert.
The biggest issue with Medicaid, she said, is coordinating the new eligibility functions with the health care exchanges, “because if they haven’t built their exchanges, it’s going to be hard to coordinate those functions with Medicaid even if their Medicaid program is ready to accept their new enrollees.”
While the Affordable Care Act includes several provisions that will minimize costs to the states, policymakers must still think about funding. The biggest thing, said Tolbert, is changing the eligibility and enrollment systems.
The Centers for Medicare and Medicaid Services recently finalized a rule that allows for a 90 percent federal match for the information technology components of getting the Medicaid programs ready for 2014.
And, while the federal government picks up the cost of the newly eligible Medicaid population for three years, anyone who applies and is eligible under the previous guidelines would be covered under the current funding formula.
Private Market Insurance Reforms
The Affordable Care Act requires some changes to the private insurance market, and some of those changes have already taken effect. These early market reforms—like elimination of the lifetime limits on benefits and the provision allowing adult children to remain on their parents’ health insurance policies until age 26—are in effect, Tolbert said.
But, she said, the ideal situation in implementation of these reforms is the adoption of state laws. Only a handful of states have passed such legislation.
“What a number of states have done instead is issue bulletins or administrative rules to implement the new requirements,” she said.
Some states have taken no action, but the rules are being implemented and enforced, according to Tolbert.
“We know from our own survey of employer health benefits, as well as data from the most recent Census Bureau Current Population Survey on health insurance coverage, that young adults are getting coverage through their parents’ health insurance policies up to age 26,” she said.