Affordable Care Act: State Action Newsletter
March 11, 2011
States Continue with Legislative Action to Establish Exchanges
The Affordable Care Act gives states the option to put a health insurance exchange into place by January 1, 2014, or defer to the federal government to create and run an exchange in the state.
So far, at least 27 states have filed legislation to establish an exchange, including: Alaska, Arizona, Connecticut, Georgia, Hawaii, Illinois, Iowa, Indiana, Maryland, Minnesota, Mississippi, Missouri, Montana, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Texas, Virginia, Washington, and West Virginia.
Policymakers face many implementation decisions if they choose to create a state-based health insurance exchange, because the federal law allows flexibility in the structure and governance of the exchange. For example, Mississippi has two bills, HB 1220 and SB 2992 that are well on their way in the legislative process. The House bill would create a Health Benefit Exchange, allowing the exchange to facilitate the sales of health plans in the individual market and assist small employers with enrolling their employees in qualified health plans. The companion Senate bill would create the exchange as a non-profit corporation and includes provisions for its structure and governance. It also would establish a board and authorize it to perform certain duties, including appointing an executive director and allowing it to apply for and spend state, federal and private grant funds.
Many other states are also considering multiple bills related to exchanges. New Jersey has at least seven bills pending to establish an exchange and New Mexico has five. These bills may take different approaches to the governance and administration of the exchange. Some of the bills deal with other details, for example conducting studies to review exchange options (e.g., Nebraska’s LB 240), addressing the interoperability between the exchange and Medicaid (e.g., Hawaii ‘s SB 978 and HB 757), and determining whether abortion coverage should be offered in qualified health plans (e.g.,Arkansas’s SB 113).
Visit NCSL’s Web pages for more information.
Maine Receives Waiver for Medical Loss Ratio Requirement
On March 8, Maine became the first state to receive a waiver of the medical loss ratio provisions for individual market insurers required by the Affordable Care Act. The federal government waived the requirement that insurers in the individual market spend at least 80 percent of premiums on medical care and quality improvement. The waiver allows the state to continue with its current 65 percent medical loss ratio requirement for the individual market until 2013, when HHS will reevaluate the need for this adjustment.
Maine applied for the waiver to preserve the state’s fragile individual insurance market, which has experienced significant premium volatility due to a lack of competition and low enrollment.
In Insurance Superintendent Mia Kofman’s letter requesting the waiver, she wrote, “…absent a waiver, I believe that the federal medical loss ratio standard may disrupt our individual health insurance market.” She noted that only two insurance companies operate in the private individual market and that one of them, MEGA Life and Health Insurance Co., indicated that it would pull out if the ACA required medical loss ratio was implemented. She said this “would have a serious destabilizing effect in the individual market.” MEGA Life currently insures more than 13,000 Maine residents or 37 percent of the state’s individual market enrollees.
The federal government is currently reviewing similar applications from Kentucky, Nevada and New Hampshire. The ACA allows states to request a temporary waiver for adjustments to the medical loss ratio requirement for individual market insurers. The federal guidance on the ACA provisions and guidance on the process for states to apply for adjustments were issued in December 2010. Visit NCSL’s Web page.
Inside This Issue
Upcoming Webinar on Oral Health and the ACA: State’s Roles
On Wednesday, March 30, 2011, at 2 p.m. EST, NCSL will host the webinar Oral Health and the ACA: States Roles. This webinar will feature presentations from national and state experts who will provide an overview on children’s oral health, a breakdown of oral health provisions included in the ACA and discuss the state role in implementation, as well as information on the successful programs adopted in Iowa
Electronic Health Information Exchange Development
The ACA supplemented previous federal efforts encouraging states to develop statewide infrastructure to facilitate exchanging electronic health information. A 2009 law, known as the HITECH Act (Health Information Technology for Economic Development and Clinical Health), created the Office of the National Coordinator for Health Information Technology (ONC). The ONC launched a pilot project, simply called the “Direct Project,” to test specifications and protocols of health information exchange (HIE) and provide individual physicians and small practices access to HIE. Rhode Island and Minnesota are the first two test sites, but ONC will launch sites in California, Connecticut, New York, Oklahoma, Tennessee and Texas next.
Additionally, ONC awarded several grants to individual states and communities for their progress in HIE development. These grants came as part of three programs that stem from the HITECH Act, including the Beacon Community Program, the HIE Challenge Grant program and the State HIE Cooperative Agreement program.
The 17 Beacon Community Program award recipients each received between $11.8 million and $16.2 million to continue developing best practices as well as building and strengthening their infrastructure and capabilities. Some of these awardees include Central Indiana, Colorado, Washington and Louisiana. The HIE Challenge Grant program awardees – Colorado, Georgia, Indiana, Massachusetts, Maryland, Montana, North Carolina and Oklahoma – were granted between $1 million and $2 million each to encourage breakthrough innovations in HIE that can be repeated nationwide.
The HIE challenge grants supplemented the State HIE Cooperative Agreement program grants, which awarded 56 states and territories between $600,000 and $38.7 million to rapidly build capacity for exchanging electronic health information. ONC states that, “Awardees are responsible for increasing connectivity and enabling patient-centric information flow to improve the quality and efficiency of care. Key to this is the continual evolution and advancement of necessary governance, policies, technical services, business operations and financing mechanisms for HIE over each state, territory and SDE’s (“State Designated Entities”) four-year performance period.
New Report Estimates the Effect of the ACA on States
A new report from the Robert Wood Johnson Foundation, “Health Reform Across the States: Increased Insurance Coverage and Federal Spending on the Exchanges and Medicaid,” provides estimates on the effects of the Affordable Care Act for the 50 states and the District of Columbia. The authors used modeling to predict their results based on full implementation of the ACA.
A small sampling of their findings include:
- The reduction in the uninsured rate would vary by state with a 1.1 percent decrease in Massachusetts to a high of a 16.9 percent decrease in Texas;
- The cost of the roughly 12 million new Medicaid enrollees would be $54 billion nationally ($45 billion coming from the federal government);
- There would be 4.9 million new Medicaid enrollees who are currently eligible for Medicaid in their state, but not enrolled, accounting for 8.3 percent of the total new Medicaid enrollment (the state does not receive the enhanced federal matching rate for these new enrollees);
- An estimated $82.3 billion in new federal Medicaid financing and exchange subsidies would flow into the states (e.g., California, $9.5 billion; Pennsylvania, $3.4 billion; Colorado, $1.2 billion; Oklahoma, $790 million).
Alaska to Implement ACA
Alaska Governor Sean Parnell reversed his opinion about implementation of the Affordable Care Act based on Florida U.S. District Judge Vinson’s stay of his ruling against the Affordable Care Act on March 3.
After the January 31, 2011, ruling by Judge Vinson, which declared the ACA void, Governor Parnell directed the state to halt implementation and forego applying for federal grants related to implementation. Judge Vinson ruled that the individual mandate provision of the ACA was unconstitutional and because it was “inextricably bound” to other provisions of the ACA that its unconstitutionality required the invalidation of the entire law.
Alaska is the only state that did not apply for and receive a federal grant for up to $1 million to plan for a health insurance exchange.
A legal analysis by the Alaska Legislative Affairs Agency concluded that Judge Vinson’s original ruling and the rulings of other lower court judges on the ACA do not apply to the state. The report says that since these courts are not located in Alaska their rulings do not hold jurisdiction in the state and do not have to be followed.