Affordable Care Act: State Action Newsletter

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July 15, 2011

2012 Ballot Measures: Let Voters Decide?

So far in 2011, three state legislatures have passed measures that propose to amend their state constitutions to prevent residents from being required to purchase health insurance. Alabama's HB 60, Florida's SB 2 and Wyoming's SJR 2 will seek a yes or no vote from citizens on their Nov. 6, 2012 ballot. Each will require a majority popular vote in order to add language such as "A law or rule may not compel, directly or indirectly, any person or employer to purchase, obtain, or otherwise provide for health care coverage" as well as prohibiting penalties for lack of coverage.  

A fourth state, Montana S 418, will ask voters to approve or disapprove a similar state statute, instead of a constitutional change. And a fifth state, Ohio, received a citizens’ petition to make the individual mandate for health insurance unconstitutional. That petition is awaiting legal verification of signatures before it is decided if the question will appear on Ohio’s ballot. Two nearly identical Ohio legislative constitutional proposals remain pending as of early July.

Proposed constitutional amendments died in 16 state legislatures, when their 2011 sessions adjourned. Bills still were pending in five other states.

In 2010, Arizona and Oklahoma became the first two states to see voters approve such constitutional amendments. In Colorado, the only state to have a signed petition-based question, voters rejected the anti-reform amendment last November. So far the two approved state amendments have not faced a legal challenge; they also have not been tested in relation to federal provisions that go into effect in 2014.

State Variations on Medicaid Spending

A study published in July’s issue of Health Affairs that examined the disparities among states’ expenses on Medicaid found the 10 highest-spending states or districts per beneficiary were Alaska, Connecticut, the District of Columbia, Illinois, Indiana, Maine, Nebraska, New Jersey, New York, and Ohio. The 10 lowest-spending were Arkansas, Kentucky, Louisiana, Massachusetts, Mississippi, Oklahoma, South Carolina, Tennessee, West Virginia and Wisconsin. Medicaid expenditures vary dramatically from state to state and the largest states are not always the biggest spenders. For example, spending per beneficiary is nearly twice as high in New York as it was in California ($21,195 versus $11,200).

The study also examined ways Medicaid may help rein in health care costs. "By increasing access to primary care and experimenting with team-based delivery models and low-cost providers, states may be able to improve quality while reducing Medicaid spending," says Todd Gilmer, professor of health economics in the Department of Family and Preventive Medicine at the University of California-San Diego.

Washington reduced hospital care by expanding primary care. Acute care spending is now 18 percent below the national average and inpatient stays per beneficiary are 35 percent below the national average while outpatient visits and prescription fills were both 15 percent higher than the rest of the country.

Models for cutting Medicaid costs could gain more attention as federal economic stimulus funding for state Medicaid programs, about $90 billion, ended June 30. Including the federal matching contribution, total Medicaid spending accounts for about 22 percent of state budgets nationwide.

Washington State Legislature Unanimously Authorizes Medicaid Waiver Bill

The Washington Legislature unanimously passed Senate Bill 5596 requiring the state Department of Social and Health Services to seek a waiver from the Centers for Medicare & Medicaid Services (CMS) for greater flexibility in administering its Medicaid program. If the federal government grants this request, Washington “could look at enacting some important reforms that would improve [its] current system of providing essential services for [the] state’s most vulnerable populations,” according to Senator Linda Evans Parlette, one of the bill’s sponsors.

The department must report to the Joint Select Committee on Health Reform Implementation, offer opportunities for the public and stakeholders to review the request, and identify necessary statutory changes.

The act authorizes the department to:

• Negotiate inflation adjusted per-capita rates for each eligibility group, such as children and pregnant women. Payments will be based on targeted per capita costs for the full duration of the demonstration period, with provisions for unforeseen events and changes in federal or state law. To work, the state needs maximum flexibility to manage how much it spends on each Medicaid patient within the negotiated rates and the ability to recoup shared savings if the program spends less than the negotiated per capita rate.
• Align the Medicaid benefit package with essential health benefits under the federal Affordable Care Act, with additional benefits for specific groups of people, such as children, pregnant women and the elderly.
• Introduce reasonable cost sharing and streamline eligibility determination.
• Promote efficiencies through payment reform, including bundled, global and other payment methods; and support for health care homes and accountable care organizations.
• Allow Medicaid and CHIP beneficiaries to enroll voluntarily in the insurance exchange and increase participation in employer-sponsored insurance when available.

Governor Chris Gregoire signed the waiver request bill on May 31, with an Aug. 24, 2011 effective date. 

New Study Shows Effect of Medicaid Enrollment

The Affordable Care Act will expand Medicaid to cover an estimated 16 million newly eligible people beginning in 2014. State lawmakers preparing for this expansion may be interested in a new study from an Oregon program that highlights differences between Medicaid enrollees and those who remain uninsured. Medicaid helps improve the physical and mental health of beneficiaries, according to the National Bureau of Economic Research (NBER). The study comes amid rising uncertainty about the financial sustainability of state Medicaid programs and some skepticism over the effectiveness of Medicaid.  

This study stems from a lottery held by Oregon in 2008 in which 10,000 individuals were chosen out of 90,000 applicants to receive coverage through Medicaid. NBER compared the individuals who received Medicaid to those who were not chosen in the lottery. The year-long study asked participants about how healthy they felt, their emotional well-being, and the effects health costs had on their finances. Participants enrolled in Medicaid were 25 percent more likely to report their health was in good or excellent condition, 21 percent more likely to seek medical services, and 15 percent more likely to receive medically necessary prescription drugs. The participants also reported a higher emotional well-being; they were 10 percent less likely to be depressed. Financially, Medicaid beneficiaries were 25 percent less likely to have unpaid medical bills than their uninsured peers. 

Although the findings reported benefits to enrollees’ overall health, the study also highlights the higher cost of providing care to Medicaid beneficiaries in comparison with the uninsured. The study indicated increased health insurance coverage did not lower the use of emergency departments by beneficiaries and also found a 25 percent greater overall medical cost for beneficiaries.