HomestoryInsurance Reform › States Implement Reforms of Healthcare as Lawsuits Proceed

News Story

States Implement Reforms of Healthcare as Lawsuits Proceed

State governments are implementing the controversial healthcare
law, even in places where elected officials are challenging its
constitutionality.

Across the country, state employees are working to define new rules
that health insurance companies will have to follow. They’re also
applying for a wide variety of federal grants offered under the law.

Government officials offer a number of reasons why states are
implementing a law their governors and other elected officials oppose.

Some cash-strapped states are taking the opportunity to grab federal
funds. Many governments are taking a cautious approach in making sure
they comply with the new federal law — at least until the courts tell
them they don’t have to.

But the most important reason, according to state officials, is to
exert control over the biggest overhaul of healthcare policy since
Medicare.

Lorez Meinhold, director of health reform implementation for Colorado
— a state whose attorney general has joined the multi-state lawsuit
against health reform — said state officials want to make sure they have
a say in how the law affects their constituents.

“If the states want to have some level of control,” she said, “I think they’re looking at each piece.”

Even in Virginia, where Republican Attorney General Ken Cuccinelli
has launched his own high-profile challenge to the healthcare law, state
officials are cautiously cooperating.

The state’s Bureau of Insurance has set up a webpage to answer
residents’ questions about the new law, linking to a federal website
that critics have derided as propaganda. Virginia also created its own
fact sheet on the Medicare prescription drug program, acknowledging that
“the Affordable Care Act passed by Congress this year contains some
important benefits for Medicare recipients.”

“This information is not intended to be an opinion, legal or
otherwise, on the healthcare reform bill,” the state website cautions,
“nor should it be construed as a position of the Bureau of Insurance or
the Virginia State Corporation Commission on the healthcare reform bill
or any of its provisions.”

Meinhold added that the lawsuits against the law are still in their
infancy, and until they’re resolved, “is it really OK to be out of
compliance with federal law?”

Opponents of the healthcare law have already seen they can lose control by deferring to the federal government.

Earlier this year, some governors — particularly Republicans —
declined to operate their own high-risk insurance pools, in part over
concerns that they were insufficiently funded by the federal government.

In the end, the Department of Health and Human Services simply ended up taking them over.

While that outcome came as no surprise — it was predetermined by the
healthcare law — GOP governors will likely want to avoid the same
conclusion with the much more momentous state health insurance
exchanges, said health economist Len Nichols.

“I think all of them, regardless of the public rhetoric, are checking
out their options,” said Nichols, formerly of the New America
Foundation and now at George Mason University.

Nichols said he expects the rhetoric to cool down after the midterm
elections, even if the federal government has a way to go before earning
state officials’ trust.

“I think there’s an awful lot of folks trying to figure out what
would make this state better that’s in this bill,” Nichols said. “I
think that’s the general word of the day.”

The Obama administration says state cooperation has been exemplary.

“Part of what’s made implementation so successful so far is the close
communication we’ve had with states,” said Paul Dioguardi, director of
the Department of Health and Human Services’ (HHS) Office of
Intergovernmental Affairs.

Dioguardi said the creation of high-risk insurance pools and HHS’s
Web portal in particular required a “close partnership” with states. He
pointed out that HHS met this week with state officials in Minneapolis
for the first in a series of conversations on the state health insurance
exchanges, and nearly every state sent a representative.

Likewise, Brian Webb, manager of health policy and legislation for
the National Association of Insurance Commissioners, said he’s not aware
of any state declining to participate in the NAIC’s meetings. The NAIC
is charged with helping define the new rules health insurance companies
will have to obey, such as how much they have to spend on providing care
versus overhead.

“From the NAIC’s perspective, we have not had any states, no
departments, say, ‘We will not participate,’ ” said Webb, who was once a
legislative aide to then-Rep. Bill Thomas (R-Calif.). “So that has not
been an issue for us. Of course, departments of insurance have this
attitude of ‘Legislatures pass it, you implement it.’ ”

He added that, barely two months after grants were first made
available to help states improve their ability to review insurance
rates, only five or six have declined to apply. The healthcare reform
law set aside $250 million in state grants over five years.

States have also been taking advantage of federal grants to help them
assist consumers, boost their primary care workforce or support
pregnant teenagers — nine different grant opportunities, in addition to
federal funding for coverage of early retirees and the high-risk pools
for people with pre-existing conditions.

Some are drawing parallels with last year’s debate over the stimulus bill.

“Most states are strapped for cash right now, is the reality,” Meinhold said.

“Even states that were opposed to [the recovery act] and some of the
stimulus dollars, they still applied for a lot of those grants. So
states are looking at ‘When does it make sense, is it an opportunity,
does it help us?’ ”

Simply applying for federal grants doesn’t necessarily mean states are following the spirit of the law, though.

The California-based nonprofit Consumer Watchdog made that point in a
letter sent Tuesday to HHS Secretary Kathleen Sebelius urging her to
reject Gov. Arnold Schwarzenegger’s (R) application for a rate review
grant.

The letter criticizes the governor’s application because California
would use the money to hire actuaries to review rate filings without
giving them the authority to reject rate requests.

“I think the intent of the grants was specifically to enhance states’
ability to thoroughly evaluate and, where it can, to approve or
disapprove rates,” said Carmen Balber, the group’s Washington director.