Affordable Care Act State Action Newsletter 52

Patient Protection and Affordable Care Act: State Action Newsletter

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March 22, 2013

Minnesota  Enacts Health Insurance Exchange law

This week, the Minnesota legislature passed the Minnesota Insurance Marketplace Act authorizing the state’s work-in-progress health insurance exchange. The governor signed the bill into law on March 20. The administration began work on the exchange in September 2011 by establishing the Health Insurance Exchange Advisory Task Force to provide recommendations on the development and operation of a state-based health insurance exchange. The exchange was branded “MNsure” by the state administration.

By the end of next month, the new law requires the governor, with guidance from policymakers, to appoint governing board members. According to the law, the board will be responsible for hiring or approving key staff, creating certification standards for insurance producers, who will help individuals and small businesses with purchasing coverage, and set requirements for the navigator program. All qualified health insurers can participate in the exchange in 2014, but the board may set certification standards for insurers starting Jan. 1, 2015. The law also includes details on funding, including that the exchange will collect a fee of 1.5 percent of total premiums in 2014 to support the operational expenses. The fee will increase to 3.5 percent of total premiums beginning in 2015. Annual reports to the legislature starting in 2015 are also mandated by the law. The exchange is expected to be up and running by Oct. 1, 2013 when nearly 1 million Minnesotans are expected to start shopping for health insurance coverage.

Inside This Issue

Medicaid Expansion Stalls in Legislatures Despite Governors’ Support    

Some state legislators across the country are asserting their opposition to the PPACA Medicaid expansion despite their state’s governor publicly announcing support.
The most visible example of this is in  Florida, where Governor Rick Scott recently changed course and announced that he supports an expansion. However, in an interview with POLITICO, House Speaker Will Weatherford quickly tamped down expectations, saying there are not enough votes in the legislature for such a measure to pass. Republican legislators countered the governor’s announcement with an alternative in the form of SPB 7038. The bill, sponsored by Senator Joe Negron, would expand the state’s Healthy Kids program to provide subsidies for private insurance to individuals with an income up to 138 percent of the federal poverty level. The program would be renamed “Healthy Florida” and would require enrollees to pay small premiums and co-pays to qualify. The bill passed out of the Senate Appropriations Committee, chaired by Negron, on Thursday.

Governor Scott is not alone in facing opposition from the legislature after publicly supporting expansion. Arizona Governor Jan Brewer’s proposal to expand eligibility in her state had its first public hearing this week. No vote was taken on the bill during the hearing, which lasted more than four hours, but it appears the bill faces an uphill climb in the GOP-controlled legislature.

Missouri Governor Jay Nixon also faced contention from legislative leaders this week, despite his continued campaign to expand Medicaid eligibility in the Show-Me-State.
Five separate proposals to expand eligibility have been voted down in recent weeks, and Republican Senate Leadership released a letter this week reaffirming their position against expansion. 

Montana Governor Steve Bullock’s legislation, HB 590, will be a tough sell to the Republican controlled House Human Services Committee next week.  Rep. Cary Smith, vice-chair of the committee, was recently quoted in the local news saying “Nobody has convinced me yet that the federal government taking over our health care was a good idea.”   Similar legislation in the Senate is headed for the Public Health, Welfare and Safety Committee, which is controlled 4-3 by Republicans.  SB 395 would expand Medicaid but also includes options that would involve the private market in administering the government-financed health coverage.  Representative Scott Reichner has announced plans to introduce a GOP alternative bill if the legislature doesn’t pass the Medicaid expansion. His bill would subsidize low-income, uninsured Montanans to purchase insurance through the federal health insurance exchange. 

Finally, Michigan Governor Rick Snyder's budget proposal included funding to expand Medicaid to an additional 500,000 Michigan residents this year. However this effort appears to have stalled for the time, as that portion of the Department of Community Health budget was removed by the Appropriations Subcommittee before passing on a 6-2 vote this week.

Colorado Sets Exchange Fees   

On March 11, the Colorado Health Benefit Exchange’s (COHBE) governing board agreed to a 1.4 percent fee on all plans sold through the exchange. The fee will be used for administrative costs after Jan. 1, 2015 when the state can no longer use federal funds to assist with those costs. According to a blog post by Patty Fontneau, the Colorado health benefit exchange executive director and chief executive officer, “The Board supported a balanced revenue approach that will support COHBE operations through a variety of funding sources. As one of the revenue sources, the Board approved an administrative fee of 1.4 percent of premiums for insurance carriers that provide health benefit plans through the COHBE marketplace starting in 2014.” In comparison, the federal government plans to asses a 3.5 percent fee to health insurers offering products in the federally facilitated exchanges.

Without Medicaid Expansion, Employers Face Decisions and Penalties    

The Patient Protection and Affordable Care Act (PPACA) requires larger employers (with 50+ full-time equivalent workers) to make affordable health coverage available beginning in 2014 or face potential penalties. 

A new report by Jackson-Hewitt Tax Service, Without Medicaid Expansion, Employers Face Higher Tax Penalties Under ACA, concludes that “states that do not expand Medicaid leave employers exposed to higher shared responsibility payments” under the PPACA.  Employers do not face a penalty if their employees enroll in Medicaid, but they may have to pay a penalty of up to $3,000 for each employee who receives a premium assistance tax credit through the health insurance exchange.

The author, Brian Haile, is a former official with TennCare and D.C. Medicaid.  He reports that associated costs to employers across the country “could total $876 million to $1.3 billion each year” in the states that may opt out of expansion. For example, a decision in Texas to forego the Medicaid expansion may increase federal tax penalties on Texas employers by $299 million to $488 million each year. The annual increase for Wisconsin and Iowa employers may be $24 million to $36 million and $13 million to $189 million respectively. The report includes a 50-state table with some estimates of employer tax penalties. The calculations have not necessarily been verified by individual states.

The IRS proposed regulations on the shared responsibility payments are summarized and published online.

A Kaiser Family Foundation  graphic  illustrates how the law defines compliance, exemptions and non-compliance.

Oregon’s Health Care Innovation Plan  

Oregon is one of six states to receive a “model testing award” through the U.S. Department of Health and Human Services’ State Innovation Models Initiative, as described in the February 22 edition of this newsletter. The state will receive up to $45 million over 42 months to implement and test the Oregon Coordinated Care Model (CCM), which will leverage the state’s purchasing power and help ensure that quality, low-cost health insurance options are available and sustainable. The CCM will realign health care payments and incentives, moving toward a system that rewards quality of care over quantity; integrates physical, behavioral and oral health; partners with local public health systems to address health disparities; and aligns incentives across health care and long-term care systems.

The Coordinated Care Model will be tested in Medicaid through the state’s network of Coordinated Care Organizations (CCOs)—community-based organizations that assume financial risk for health care costs. Although CCOs are responsible for their own payment and delivery reforms, they are also responsible for the health of the people they serve and have incentives to reduce the cost and improve the quality of the care they provide. Over time, CCO payment will shift from a fully capitated arrangement to one that increasingly depends on health care outcomes. To help facilitate this transition, Oregon plans to establish a Transformation Center to share best practices and to help expand the model to Medicare and private health insurance plans—such as qualified plans in the state Health Insurance Exchange.

NCSL Health Reform Task Force Meets May 4     

NCSL’s Task Force on Federal Health Reform Implementation will hold its next meeting at NCSL’s Spring Forum in Denver on Saturday, May 4 from 10:30 a.m. to 4 p.m.  The agenda, titled “Countdown to Health Reform,” features national and regional experts who will discuss issues affecting states, including the Medicaid expansion, the major role of employers, state choices on launching health exchanges and recent HHS rules and guidance. In addition, a member roundtable will provide lively discussion among participants.  The meeting is open to all NCSL members and Spring Forum attendees.  The latest Task Force member list and agenda are online.

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