By Colleen Becker
Much like Newton’s third law of motion, 2018 proved to be a year of action and reaction for state legislatures and their insurance marketplaces.
With uncertainty and confusion about what effect federal level policies would have, state legislatures responded with a variety of approaches to maintain or broaden coverage and stabilize their health insurance marketplaces.
One of the first actions of President Donald Trump’s administration was the repeal of the individual mandate penalty. Experts warned this could cause consumer confusion compelling many individuals to forego buying a policy and drop out of the marketplaces.
Two states, Vermont and New Jersey, as well as Washington, D.C., responded by passing their own mandates. Massachusetts’ mandate has been in place since 2006.
Some states had a different reaction to the repeal. Nineteen states sued the federal government in Texas v. Azar, arguing that by zeroing out the penalty, this invalidated the entirety of the Affordable Care Act (ACA). While the federal government, so far, has opted not to defend the law, 16 states are fighting to uphold it.
The Trump administration also relaxed the rules around short-term, limited-duration plans and association health plans. These plans are not required to comply with the ACA’s consumer protections, nor are they required to cover the essential health benefits mandated in the ACA.
Proponents suggest that these plans will give consumers a lower-cost coverage option while critics say this approach will exempt these plans from many of the ACA’s protections for people with preexisting conditions. Furthermore, they say, it may supersede states’ ability to regulate health coverage within their borders, creating an environment that could foster fraud and insolvency.
Lawmakers in eight states, acting to stabilize their insurance marketplaces, implemented 1332 State Innovation Waivers, also known as State Relief and Empowerment Waivers. The most common 1332 waiver application was for state reinsurance programs.
Reinsurance works by cushioning insurers’ obligations to pay expensive medical claims incurred by their members by covering some of those expenses, usually when they exceed a certain threshold or attachment point.
Alaska, Oregon and Minnesota forged ahead with programs beginning in 2018 and are already seeing results. Four additional states, Maine, Maryland, New Jersey and Wisconsin, will implement their reinsurance programs in 2019. Still, others have enacted legislation, but their waivers have not yet been filed or approved.
Voters produced a wave of Medicaid expansion in 2018. Ballot initiatives to expand Medicaid passed in Idaho, Utah and Nebraska, while Virginia approved expansion through its annual budget bill. A ballot initiative in Maine was also approved by voters in 2017, but implementation stalled until newly elected Governor Janet Mills issued an executive order in January 2019 directing the state’s Medicaid agency to move forward with implementation.
Thirty-seven states, including the District of Columbia, have now adopted the ACA’s Medicaid expansion provision. Governors in Kansas and Wisconsin are also discussing possibly expanding Medicaid in the upcoming session.
Another action from the Trump administration was to cut funding to the federal navigator program for 2019 open enrollment in insurance exchanges. Reducing the program by 84 percent since Trump took office in January 2017, the Centers for Medicare and Medicaid Services (CMS) reasoned that public awareness of the marketplace and new coverage options have improved since the ACA was enacted, rendering the program less cost-effective.
Though it was ambiguous how these changes would affect the marketplaces, 2019 rate filings in many states stayed relatively flat or experienced decreases. With the federal open enrollment period now over, CMS reports that 8.4 million people enrolled in plans for 2019 compared to 8.7 million the year before.
The year ended dramatically with the ruling in Texas v Azar. Justice Reed O’Connor of the Texas federal court sided with Republican attorneys general and agreed that, without the individual mandate penalty, the whole ACA was invalid. Several Democratic attorneys general vowed to appeal the decision.
Although the fate of the ACA could likely end up in front of the Supreme Court, for now the judge opted to forego a nationwide injunction which would have had the immediate effect of upending all aspects of the law.
With 2018 behind us, state legislators on both sides of the aisle continue to reach across it to craft creative solutions that meet the needs of their constituencies.
What legislative trends might emerge for 2019 is still anyone’s guess, but, what is clear is that states will need to stay nimble to act, or react, to an ever-changing health care landscape.
Colleen Becker is a policy specialist in NCSL's Health Program.