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By Richard Cauchi

The federal Affordable Care Act (ACA) includes more than a dozen consumer protections aimed at fixing previous local variations or shortcomings in availability, affordability and adequacy of individual market health insurance.

Yet a look inside implementation shows it to be more of a continuum than a mandate. Almost all states continue to be the primary regulators of health insurance, with flexibility in implementing the law. 

This month a new report on State Action to Reform the Individual Health Insurance Market, published by the Commonwealth Fund, explains and demystifies the intersection of state laws and federal reforms

In some cases states were ahead of the ACA, enacting consumer protections before the law was even drafted. In others, popular state-initiated ideas such as covering young adults until age 26 on their parents’ family plans are now available in all 50 states, as well as districts and territories. This means consumers are likely to experience some of the new protections differently, depending on where they live.

Here are a few examples of state consumer protection strategies taken from the 16-page report:

  • In 10 states and D.C., consumers’ premiums are calculated under “rating” rules that exceed federal requirements. For example, insurers are prohibited from charging tobacco users higher premiums in California, Massachusetts, New Jersey, New York, Rhode Island and Vermont, although the ACA allows an up to 50 percent extra premium charge.
  • Nine states and D.C. prohibit substitutions for essential health benefits, to facilitate apples-to-apples comparisons among plans and reduce cherry-picking of healthier enrollees.
  • So far, two states, Maine and Vermont, have set limits on the total out-of-pocket expenses consumers have to pay for out-of-network prescription drugs.
  • Seven states now require some standardized benefits to reduce consumer confusion in their health marketplaces. Oregon went a step further and imposed limited standardization in plans outside the marketplace, as well, while New Jersey continued an existing directive that requires all individual policies to be standardized.

Lead author Justin Giovannelli concludes the report by emphasizing that “continued tracking and analysis of these developments will be essential to understanding how consumers are experiencing individual coverage in the new health insurance landscape.” He also adds a cautionary update about the territories: “Most of the market reforms discussed in our paper (e.g., guaranteed issue, adjusted community rating, issues related to EHB) are no longer applicable to the territories.”  

NCSL currently tracks and reports about recent state laws that affect marketplace benefits and design, with legislation online updates of every two weeks.

Giovannelli will be a presenter at NCSL’s Health Reform Task Force meeting in Minneapolis on Aug.19. View the NCSL meeting agenda and register online.

Richard Cauchi covers health insurance reforms for NCSL.

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This blog offers updates on the National Conference of State Legislatures' research and training, the latest on federalism and the state legislative institution, and posts about state legislators and legislative staff. The blog is edited by NCSL staff and written primarily by NCSL's experts on public policy and the state legislative institution.

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