Affordable Care Act: State Action Newsletter
January 27, 2012
New Report on State Progress Establishing Exchanges
Nearly two years since the enactment of the Affordable Care Act (ACA), researchers at the Urban Institute assessed states’ progress in establishing a health insurance exchange. The new report, funded by the Robert Wood Johnson Foundation, indicates a wide variety of progress. Under the act, states are required to establish an exchange by Jan. 1, 2014; if they don’t, the federal government will develop it for them. Researchers divided states into three groups based on their progress:
- Group 1 states have passed state legislation or the governor has issued an executive order establishing an exchange.
- Group 2 states have expressed considerable interest in establishing an exchange, having: passed intent legislation; legislation pending, or received a Level 1 federal establishment grant.
- Group 3 states have made little or no progress.
The study found that, on average, Group 3 states have the greatest potential to make the most gains in insurance coverage rates and largest reductions in uncompensated care spending, compared with the other states. Under the ACA, the rate of uninsured residents in Group 3 states is expected to fall by half.
The White House recently released a report highlighting state progress in establishing health insurance exchanges.
Wisconsin Returns Federal Funds
On January 18, Wisconsin Governor Scott Walker announced he will return $37.6 million in Early Innovator Grant program funding to the federal government. These grants were given to six states and one multistate consortia last February to help “design and implement the information technology needed to operate health insurance exchanges.” Wisconsin joins Kansas and Oklahoma in returning these innovator grants. Together, these three states have returned more than $123 million in federal funding to help implement the Affordable Care Act.
The governor directed the Department of Health Services to “discontinue any development on a health exchange.” The governor plans to repeal Executive Order 10, which established an office to develop a statewide plan for the health benefit exchange using a free market, consumer-driven approach. The governor cited Wisconsin’s innovation and leadership in health care reform for the past two decades, and current high levels of health insurance coverage within the state, as reasons to not comply with the federal health reform health benefit exchange requirement.
Inside This Issue
Rate Review Deems Insurance Premium Increases Unreasonable
As of Sept. 1, 2011, the rate review regulation created by the Affordable Care Act requires individual or small group market insurance companies seeking to increase premiums by 10 percent or more to disclose and justify the increase publicly before it takes effect. Independent experts will review all rate increases of 10 percent or more to determine if they are unreasonable. In 42 states and the District of Columbia, federally approved state rate review programs will review proposed increases, and in six states (Alabama, Arizona, Louisiana, Missouri, Montana, Wyoming) the federal government will conduct the rate reviews. Two states (Pennsylvania, Virginia) will work with the feds to conduct reviews.
On Jan. 12, 2012, the U.S. Department of Health and Human Services (HHS) determined that Trustmark Life Insurance Company proposed unreasonable premium rate increases of more than 10 percent in five states: Alabama (27.15%), Arizona (18.10%), Pennsylvania (14.97%), Virginia (12.70 %), and Wyoming (11.80%). HHS explained that “the rate increases were unreasonable because the insurer would be spending a low percent of premium dollars on actual medical care and quality improvements, and because the justifications were based on unreasonable assumptions.”
Massachusetts Health Reform: Results
A recent study examined Massachusetts health reform law four years after it was established in 2006; the law that served as a model for many provisions of the federal ACA, including Medicaid expansion, health insurance exchanges, subsidized private health insurance, private market reforms and the individual mandate.
Data were collected in 2010, and the key findings are as follows:
- 94.5 percent of nonelderly adults were insured in 2010, which is a 7.9 percent increase from 2006.
- 68 percent of nonelderly adults were covered by their employers compared with 64.4 percent in 2006, indicating that the increased public coverage did not “crowd out” employer-sponsored insurance.
- The number of adults reporting having a “usual” health provider was up 4.7 percentage points, and the number having a preventive care visit increased by 5.9 percent. “During the 2006-10 period there were drops in the shares of adults reporting a hospital stay and using the emergency department,” according to the report.
- More nonelderly adults reported their health as very good or excellent, with an increase from 58.7 percent in 2006 to 64.9 percent in 2010.
- 22.8 percent of nonelderly adults reported that they did not get needed care in 2010, most often due to costs; the share of adults who reported problems paying medical bills was unchanged by the health reform measures.
The authors of the study concluded that the “findings for Massachusetts are a reminder that major gains in coverage and associated benefits are possible,” but that “the success of health reform under the Affordable Care Act in Massachusetts, and in other states, will depend on the ability of policymakers and stakeholders to come together to take on the considerable challenge of reining in health care costs.”
Legislators’ Top Health Reform Priorities
NCSL asked policymakers and their staffs to identify their top three health reform policy priorities for the 2012 legislative session. Their responses were in line with key ACA provisions left to the states to carry out. Establishing health insurance exchanges was the most common priority identified by respondents. States are tackling a number of issues within the exchange debate including: continuing with
planning discussions that are already underway; negotiating the details for a fully state-administered program; and debating whether the state should step aside and allow the federal government to run the exchange.
The potential spending increases related to the Medicaid expansion is another policy priority, especially at a time when states are trying to balance already tight budgets. Dealing with health information technology was another popular response. Specifically, many named developing the technology for determining eligibility and upgrading systems as high priorities. Defining essential health benefit packages is also on policymakers’ agendas, as the ACA and recent federal guidance left much of this responsibility in states’ hands. This year policymakers will be addressing how their current laws comply with the essential health benefits mandates. Finally, the Supreme Court decision on the ACA, expected this summer, leaves an air of uncertainty on the future of the law, further complicating the policy debates.
Colorado House Seeks U.S. Convention to Repeal ACA
Colorado’s House of Representatives adopted a non-binding resolution, HR 12-1003, on Jan. 19. It requests Congress to call a federal constitutional convention to propose an amendment to repeal the Affordable Care Act. Article 5 of the Constitution requires two-thirds of the legislatures to make such a formal request in order to convene a constitutional convention. If a federal convention approved such an amendment, it would then require ratification by 75 percent of all states.
The Colorado resolution sponsors expressed hope that this could become a new legal tactic for those in other states who oppose the ACA. Texas lawmakers considered but did not pass the first such resolution in 2011.
Colorado’s attorney general is among the 28 states’ officials challenging parts of the federal health reform act in the lawsuits to be heard by the U.S. Supreme Court on March 26-28. In 2010, Colorado voters rejected, 53 percent to 47 percent, a state constitutional amendment opposing an individual or employer mandate to purchase health insurance.
Oregon Releases Exchange Plan
Oregon’s nine member governing board released the Health Insurance Exchange Corporation Business Plan.
According to the report, the business plan is intended to answer four key questions:
1. What is the Exchange?
2. What is the value for Oregonians?
3. How much will it cost?
4. Will it be sustainable?
Oregon created a public corporation to operate the exchange in the state. The exchange board of directors consists of private citizens, with the exception of two state officials.
The board is also required to establish a Consumer Advisory Committee and is allowed to establish other types of advisory committees.
A new report from the Kaiser Commission on Medicaid and the Uninsured outlines findings from a 50-state survey on Medicaid and CHIP eligibility, enrollment, renewal and cost-sharing policies. According to the report, Medicaid and CHIP eligibility remained largely unchanged, mostly due to the ACA maintenance of effort requirement, despite ongoing fiscal pressure; 11 states made targeted expansions. Only two states reduced eligibility for certain adults—Arizona froze enrollment in its 1115 waiver program for childless adults and Nevada chose not to renew its expiring waiver in 2011, which discontinued coverage for some parents and pregnant women. The survey also found that states have improved technology and streamlined procedures to create more efficient programs.