Health Reform in the States: Implementation Continues While Law Remains In Flux

Full access

While the nation awaits a ruling this month from the Supreme Court on the constitutionality of the Affordable Care Act (ACA), activities working toward implementation—or lack thereof—continue to be a complicated issue for states, especially those wrestling with differing views on health reform among state policymakers, governors, insurance commissioners, and attorneys general. Many states continue to move forward with implementation even as their governors decline or return federal funding to assist in development (Table 1).


Health exchanges

With a deadline to have a basic proposal in place by January 2013, creation of health care exchanges has been at the top of the priority list. Scheduled to begin in 2014, these exchanges will act as health care marketplaces for consumers looking to purchase individual health plans, and will also act to streamline eligibility and enrollment processes for Medicaid and the Children’s Health Insurance Programs (CHIP).

So far, 17 states and the District of Columbia have established exchanges. Most have hit the ground running to gather stakeholder reports, convene task forces, and network with other states working on implementation through websites like States are also studying the failures and successes of the Massachusetts Health Connector, the only operating health exchange and the model for the exchange language in the ACA. Early reports on the Massachusetts model look promising. Access to care has increased without any discernible “crowd-out” (consumers dropping care and crowding into public plans), but high health care costs remain an issue.

Most states created exchanges through legislation, but governors from New York and Rhode Island used executive orders to bypass bills that failed in the legislature. Nineteen states are in the process of reviewing their options for developing an exchange and 12 have not made any moves. Legislative bodies in two states, New Jersey and New Mexico, were able to get bills passed only to see them vetoed.

At press time, 16 of 34 states that do not yet have an exchange established are now out of session until the new year. If the Supreme Court upholds the law, these states may be scrambling in special sessions this fall to put something together or else be subjected to a federal exchange program, the details of which have not been clarified by the Obama administration. Two states, Arkansas and Louisiana, have chosen the default option of letting the federal government operate exchanges in their states.

If the Supreme Court repeals the ACA in full, federal funding will not be available and states with legislatively mandated exchanges not yet up and running could be in dire straits, although some states have decided to go forward regardless of the Supreme Court’s decision. Exchanges could be further damaged if most of the law stands but the “individual mandate” is deemed unconstitutional. The individual mandate requires that everyone who is not covered under an employer group health plan be insured. In that case, state health exchanges may see an influx of only the poorest and sickest patients who cannot receive public assistance in another way.

Medicaid expansion

Another element of the ACA awaiting a Supreme Court decision is the provision to expand Medicaid to all individuals with incomes of up to 133 percent of the federal poverty level ($25,390 for a family of three in 2012). This expansion, scheduled to start in 2014, would primarily affect childless adults not typically covered unless they are eligible through age (<65 years) or on disability, but would also increase eligibility for parents, as most states do not cover them over 100 percent of the federal poverty level, with many covering only up to 50 or 60 percent.

Six states have taken advantage of federal funds available to expand Medicaid eligibility before 2014. Income limits for childless adults in these states range from 23 percent of the federal poverty level in New Jersey to 200 percent in California and New York. If Medicaid expansion is not struck down, the federal government will assume 100 percent of the costs to cover newly eligible enrollees between 2014 and 2016 and will continue to pay approximately 90 percent of the costs until 2022.

Funding opportunities through the ACA

States, as well as health care and research institutions, are taking advantage of funding opportunities coming out of the Center for Medicare & Medicaid Innovation, created and funded through the ACA as a means to help design and evaluate new models of care for Medicare, Medicaid, and CHIP beneficiaries.

Grants have been awarded through the innovation center for 26 projects in 41 states, including several interstate projects. George Washington University, for example, has received funding to provide telemedicine services for peritoneal dialysis patients in the District of Columbia, Pennsylvania, and Maryland. Goals include training health care professionals and decreasing comorbidities through coordinated care. A project targeting poor and underserved areas in North Carolina and Virginia will focus on reducing complications from diabetes through coordinating care through local teams of health care professionals. The second round of innovation grants will be announced this summer, although the repeal of the ACA could deauthorize funding for these projects.

Funding has also been extended to 15 states to design better models of care for individuals who receive both Medicare and Medicaid. These individuals are known as “dual eligibles.” These patients make up a small portion of the Medicare population but account for a large portion of expenses, as they are often older, poorer, and suffer from multiple, chronic medical conditions. States that have been awarded contracts now have the chance to create demonstration projects outlining the logistics and implementation strategy of the coordinated care model they initially submitted. Approximately 32 percent of prevalent end stage renal disease patients are classified as dual eligible, but it is unclear how these demonstration projects will address this complicated population.

For more information on Center for Medicare & Medicaid Innovation funding opportunities and program descriptions, visit