Affordable Care Act State Action Newsletter 22

Affordable Care Act: State Action Newsletter

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November 18, 2011

Minnesota Convenes Exchange Advisory Task Force

The Minnesota Health Insurance Exchange Advisory Task Force began meeting this month after the Department of Commerce Commissioner Michael Rothman announced the formation of the group in September 2011. The advisory task force was established under a grant from the federal Department of Health and Human Services for $4,168,071.00 and authorized by Governor Mark Dayton. The governor assigned the commissioner of Commerce responsibility for the design and development of a Minnesota Health Insurance Exchange and for providing legislative recommendations on changes to state and federal laws related to the private health insurance market. The 15-member group will provide guidance on the design and operation of a state-based health insurance exchange.

There are four seats for legislators on the advisory group, two Democrats and two Republicans from each chamber. Thus far, the Republicans have not participated in the meetings.  “We believe the exchange advisory task force is a partisan exercise and that Gov. Dayton has not demonstrated any interest in working with the Legislature or the public,” says Senator David Hann, chairman of the Senate Health and Human Service Committee. “Because he has chosen this approach, our caucus has declined to give him political cover by participating. He needs to work with the Legislature.”

Although Republican participation on the advisory task force is uncertain, minority caucus representation will continue. “Minnesota is already a leader in health care, with lower than national average administrative costs and a successful high risk pool program, but the Legislature will need to agree on changes to insurance laws in order for a state exchange to be implemented,” says Representative Thomas Huntley, member of the advisory task force and House Health and Human Services Committee. The advisory task force is scheduled to meet at least four times before the 2012 session convenes in January.

How Does the ACA Affect Rural America?

A series of white papers has been released this year that focus on the Affordable Care Act’s effect on rural communities.

The papers were developed by the National Advisory Committee on Rural Health and Human Services, a citizens' panel of nationally recognized rural health experts who provide recommendations on rural issues to the Secretary of the Department of Health and Human Services.

Following the release of the committee’s 2011 Report to the Secretary in March, the committee has published five reports:

The Rural Assistance Center is planning a webinar on December 2 at 3:00pm EST to highlight the publications. For more information on Rural Health Issues, visit NCSL’s Rural Health Page.

Inside This Issue


Georgia Medical Loss Ratio

On Nov. 8, 2011, Georgia was granted permission to adjust its Medical Loss Ratio (MLR) standards. The Affordable Care Act allows the secretary of HHS to adjust the standard for a state if it is determined that meeting the 80 percent standard for the individual and small group market may destabilize the individual insurance market and could result in fewer insurance choices for consumers. Georgia’s adjustment came in the form of a letter issued by Steve Larsen, deputy administrator and director, Center for Consumer Information and Insurance Oversight.

The Georgia Department of Insurance requested an adjustment of the MLR standard to 65 percent, 70 percent, and 75 percent for the reporting years 2011, 2012 and 2013, respectively. The secretary allowed Georgia to adjust the standard in the individual health insurance market to 70 percent for 2011 and to 75 percent for 2012. The HHS decision held the 80 percent standard for Georgia’s MLR in 2013 and thereafter.

According to Georgia’s application, nearly 346,000 state residents obtain health insurance coverage in the individual health insurance market. Georgia’s Department of Insurance predicted that eight insurers might pull out of the market if the 80 percent requirement had hit this year.

There were also a number of concerns addressed by the Georgia Department of Insurance. The state does not have a guaranteed issue requirement, limits on health status rating, or an issuer of last resort, and its federally operated pre-existing condition pool has a six-month waiting period. Accordingly, enrollees who would lose coverage due to issuer withdrawal may have difficulty in finding immediate alternative coverage options. When an issuer withdraws from the individual market, state law bans it from re-entering the market for five years. The Georgia Department of Insurance felt that this would also limit competition and consumer choice.

To date, 17 states, including Georgia, have sought waivers. Waivers were denied to North Dakota and Delaware; granted to Maine; and adjustments were made to the requests from Iowa, Kentucky, New Hampshire and Nevada. Requests from Florida, Indiana, Kansas, Louisiana, Michigan, North Carolina, Oklahoma and Texas are undergoing review.

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Medicaid Directors Publish New Report

National Association of Medicaid Directors (NAMD) recently published a report, “Creating a Climate for Innovation,” calling for changes to the Medicaid program that, according to the national association, would increase the program’s sustainability. This report outlines three areas where changes are needed to help states improve their programs:

  • Focus on better health care results rather than bureaucratic process measures.
  • Streamline business practices to ensure state flexibility and spur greater innovation in the program.
  • Support a system for rapid dissemination of best practices so that all states can benefit from identified advancements.

The report identifies ways structural deficiencies lead to duplication of services, uncoordinated care, and other inefficiencies, and how they can be addressed. The report states that the “current nature of the federal–state relationship means that innovations may take years to garner the needed permissions, and even then program structures are insufficiently flexible to meet the changing nature of the health care system.”  According to the report, not all the blame for Medicaid troubles can be solved through more state flexibility; many of Medicaid’s challenges are a result of failures in the broader health care system and not intrinsic to Medicaid itself. According to the report, however, allowing states to serve as the laboratories of experimentation is one way to learn about what Medicaid reforms will best contain costs while improving quality. Andy Allison, Kansas Medicaid director and president of NAMD commented that “the transaction costs of innovation in Medicaid have simply been too high and the dissemination of best practices and successful innovations has been too slow. Addressing these challenges will entail new roles for states, the federal government and program stakeholders.”

Update on Challenging Health Reform

Ohio Constitutional Amendment Passes

On November 8, Ohio voters approved a citizen-initiated petition for a constitutional amendment stating that “no law or rule shall compel, directly or indirectly, any person, employer, or health care provider to participate in a health care system.” As Ballot Issue 3, it passed 66 percent to 34 percent. Ohio is the third state, after Arizona and Oklahoma, to add such language to a state constitution.

Supreme Court to Hear State Challenges to ACA

The U.S. Supreme Court’s announcement on Monday that it would review the key ACA lawsuit is big news nationwide, but was not a surprise. In recent months four separate U.S. Circuit Courts of Appeal handed down rulings. The key lawsuit accepted for review, Florida v. HHS (No. 11-400), originated with the Florida attorney general back in March 2010; by January it grew to include officials from 26 states. The Florida case argued that the reform law should be struck down because it relies on an unconstitutional expansion of federal power. The courts have differed significantly in their rulings so far. The Florida case led to a ruling against the individual mandate, while three other appeals courts (in Virginia, Ohio and D.C.) dismissed the challenges or upheld the federal law.

The court will hear five and a half hours of legal argument on four legal questions to be considered:

1) The constitutionality of the “individual mandate.” As stated in the appeals case, HHS v. Florida (No. 11-398) , “Whether Congress had the power under Article I of the Constitution to enact the minimum coverage provision.”

2) To what extent, if any, the mandate is “severable” or whether other parts of the law can go forward if the coverage requirement is found unconstitutional.

3) The constitutionality of the Act’s Medicaid eligibility expansion. Florida’s original case argues that Congress would “exceed its enumerated powers” by creating such a major expansion of the Medicaid program.

4) Whether the issue is “ripe” or timely for a decision. Some lower court judges have concluded the penalty for not having insurance is the same as a tax and because of the Anti-Injunction Act cannot be challenged until taxpayers actually have to pay it in 2015.

The state attorneys general include: AlabamaAlaska, Arizona, Colorado, Florida, Georgia, IdahoIndiana, Iowa, Kansas, Louisiana, Maine, Michigan,  Mississippi,  NebraskaNevadaNorth Dakota, Ohio, PennsylvaniaSouth CarolinaSouth DakotaTexasUtahWashington, Wisconsin, and Wyoming. Virginia filed a separate lawsuit.

District of Columbia U.S. Court of Appeals

On Nov. 8, 2011, at the U.S. Court of Appeals for District of Columbia, a three-judge panel issued a ruling (No. 11-5047)upholding the constitutionality of the federal ACA law. In a 2-1 decision, Judge Laurence Silberman affirmed the lower court’s ruling, finding that the ACA’s individual mandate is within Congress’ powers. This was an independent lawsuit filed by the American Center for Law and Justice and dismissed by the U.S. District Court on Feb. 22, 2011.


Due to NCSL’s Fall Forum, the next issue of the Affordable Care Act: State Actions Newsletter will be in Dec. 2011.



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