Posts Tagged ‘health care’

In a Presidential Election Year, States Left to Pick Up the Pieces of Health Reform

January 26, 2012

By Robert Holden, Vice President

On January 25, the Department of Health and Human Services (HHS), through its Center for Consumer Information and Insurance Oversight (CCIIO), released information identifying the three largest health plans in each state, as well as the three largest national Federal Employee Health Benefit Program (FEHBP) plans to aid states as they consider how to implement health reform.

From the perspective of the states, the implementation of the Affordable Care Act (ACA) has long been a waiting game.  After its enactment in 2010, it became clear quickly that states would be doing much of the heavy lifting when it came to implementing the insurance reforms required under the act, primarily because until then health insurance regulation was almost exclusive to the states.  Nevertheless, states were dependent on federal guidance and rulemaking before they could make progress towards many of the private insurance reforms and the 2014 implementation date for health benefit exchanges.

Throughout 2011, states had anticipated that federal HHS rules would then define the specific benefits that would be covered in each of these categories so that they could address this issue in the 2012 legislative sessions.  However, after recommendations from the Institute of Medicine, HHS did not propose rules addressing specific benefits.  Instead, the agency released a December 16, 2011, bulletin advising the states to develop a “bench mark” based on employer plans in their states, which could be the basis for benefits in their respective exchanges, and which HHS would review in 2016.  This removed a potentially charged issue from discussion at the federal level until well after the 2012 election.

Now, even with information identifying their largest health plans, states must contend with a lack of federal guidance addressing one of health care reform’s most politically charged issues: what benefits will be covered under the new system?

Essential Health Benefits, the benefits that must be covered by health insurance plans offered through state health benefit exchanges, are defined broadly in the ACA to include the following categories: (1) ambulatory patient services, (2) emergency services (3) hospitalization, (4) maternity and newborn care, (5) mental health and substance use disorder services, including behavioral health treatment, (6) prescription drugs, (7) rehabilitative and habilitative services and devices, (8) laboratory services, (9) preventive and wellness services and chronic disease management, and (10) pediatric services, including oral and vision care.

While many of these categories are already covered by health plans, states have long had their own individual concepts of what constitutes an “essential” benefit.  Each session, states introduce scores of bills mandating health insurers provide coverage for specific health benefits.  These have been generally opposed by the insurance industry as increasing costs, but frequently address popular concerns, such as continued coverage of routine mammograms or coverage for the treatment of autism spectrum disorders.  The ACA acknowledged the potential for increased costs created by coverage mandates.  Because federal subsidies would keep premiums affordable for individuals utilizing the state exchanges, the act requires states to pay costs attributable for benefits required beyond the essential health benefits provided for under the ACA.

Unsurprisingly, the details of the essential health benefits had been greatly anticipated by state legislators who now, in light of the HHS bulletin, may have substantial leeway in preserving their current mandates.  At a minimum, states will be able to use health plans (subject to their state’s mandates) to create a benchmark for the new state health benefit exchange.  While there is still uncertainty as to how the state benchmarks will be judged by HHS in 2016, states have already started to determine processes to review their state mandates and how they fit into the ACA’s essential benefits.

Prior to the release of the HHS bulletin, Massachusetts and Minnesota introduced a number of bills placing a moratorium on new mandates, as well as legislation to require a comprehensive regulatory review of mandated benefits in their states.  While Massachusetts legislation proposes to authorize the Division of Health Care Finance to review the mandated benefits, and Minnesota legislation authorizing their Commissioner of Commerce to do the same, South Carolina, Rhode Island and West Virginia would look to their respective insurance commissioners.

Regardless of the review process, states will be revisiting their mandated insurance benefits this legislative session, and the issue will undoubtedly receive attention at the state insurance commissioners’ (NAIC) meeting in March.  Stakeholders, including disease treatment advocates, pharmaceutical and equipment manufacturers, as well as health care provider groups will be pressing the case that their services and products are essential to health care consumers.

An Early Look at the 2012 Legislative Session

October 28, 2011

By Stateside Associates

Over the course of the past month Stateside Associates professionals interviewed contacts in all 50 states to get a sense of the top issues that will face lawmakers in the coming year.

With state budget debates looming and a busy election cycle serving as the backdrop for the 2012 legislative session, we provide you this list as a preview of some of the issues expected to dominate agendas and headlines in 2012.

Please note that next year is the second year of the biennium for most state legislatures—only New Jersey and Virginia start their biennium in even years. Twenty-seven states and Puerto Rico allow for at least some legislation to carry over from the 2011 session into 2012. Four states (Montana, Nevada, North Dakota and Texas) will not hold regularly scheduled sessions.

While the issues described herein will dominate the dockets of state legislatures next year, this list is far from exhaustive. The wrangling for early primaries and the focus on the presidential election will likely lead to electoral reforms cropping up in statehouses. Issues surrounding labor and public employee unions, such as pension reform and collective bargaining, will certainly be discussed in the wake of the vocal debates in Wisconsin, Ohio and New Jersey.  Public safety and the environment issues are always prevalent, and technological advances spur new legislative initiatives every few months.

Legislative Elections

In the 50 states 86 of the 99 total legislative chambers will be holding elections, in which 81% of all state legislative seats will be considered. The partisan splits in chambers in more than half of states, ten or fewer seats separate the majority from the minority. Even though party control is not expected to change in the majority of states, a presidential election and redrawn legislative districts provide little reassurance when it comes to the balance of power within and across states. When it comes to campaign issues, expect legislators to focus pull out issues popular with both Democratic and Republican constituencies meant to excite each party’s base.

Budgets

After several years of deep cuts, state budget situations are showing signs of recovery, but remain significant effects from the recession remain. According to the National Conference of State Legislatures (NCSL), FY 2012 marks the fourth consecutive period that states have faced significant mismatches between revenues and spending. After lengthy budget debates in the 2011 session only New Hampshire and Washington project deficits at the end of FY 2012.

But state budget experts are still very worried about the situation. The budget projections used by states are based on tax collection rates that continue to lag behind expected tax revenues. Stimulus money is gone. Clever accounting can only push off costs for so many years. More than 20 states are anticipating a budget gap for FY 2013 and FY 2014 and all projections show this number growing in the coming years. Therefore, the 2012 legislative sessions will be marked by sharp budgetary battles in which legislators will be forced to reform state government, continue cost cutting and/or increase revenue.

Economic Development and Job Growth

Numerous states have seen jobless rates continue to climb, including states that have traditionally outperformed the rest of the country in the South and the West. Legislators in at least 15 states, including Arizona, Florida, Georgia, Louisiana, Mississippi and Utah have indicated that job growth and economic development will be the centerpiece of the next session. Legislators are expected to advocate several priority proposals in this regard including manufacturing facility development and modernization incentives, small business financing programs and financial incentives for job creation. Tax credits and incentives for hiring unemployed residents were approved in states like Alabama, Florida and Maryland in the 2011 session and many of the states mentioned above will consider similar legislation in 2012.

Education

Education funding and reform is a priority for lawmakers every year. One trend on the education front is the effort by states to pull away from federal education mandates. Eight states have indicated an intention to pursue waivers from the federal “No Child Left Behind” law. The new policy announced by the President last month is that in order to receive these waivers states will need to develop and implement certain standards for math and reading, create systems to measure school performance and develop teacher and principal evaluation programs. All this will take place during the 2012 session—lawmakers will approach public education with even less funding while trying to perform at a higher level.

Energy

The hot energy issues next year will be the plans that propose increased development of energy resources while aiming to develop future energy transmission corridors and other infrastructure. In the 2011 session three in every five states considered energy transmission language. The number of states tackling energy will likely increase in next year’s session—legislators in more than 25 states have noted energy issues as a major priority for 2012.

No energy proposal will be one-size fits all. The focus of any energy legislation will depend on the specific energy issues at play in each state. Transmission line deployment is a big issue in Western states like Wyoming and Montana. Pipeline development and hydro-fracking regulations will dominate the oil and natural gas discussions in states throughout the Marcellus Shale region and in Southern and Western States. Alternative and renewable energy sources will be discussed in states throughout the country, including in Maryland where Governor O’Malley (D) is in favor of an off-shore wind energy project.

Immigration Reform

Although state legislatures considered more than 240 immigration-related measures in 2011, only 10 states enacted legislation. Despite the plethora of bills considered, lawmakers have been hesitant to expend political capital on immigration reform until federal challenges to state immigration reform attempts are finalized. Until that happens the discord between the federal government and states on immigration policy will continue to set the tone for immigration efforts throughout the 2012 session.

While a federally-driven comprehensive immigration reform package is possible, it’s more likely we’ll see one or more bills narrowly targeting employment and the electronic verification of workers.

One development that will make states more willing to tackle immigration measures was a recent ruling from U.S. District Judge Sharon Blackburn to allow much of Alabama’s H.B. 56 to take effect. This ruling, along with previous rulings in Arizona and Georgia, may start to provide a roadmap for other states to follow.

Medicaid

Health care reform and funding for state Medicaid programs are always a priority issue in the states. Add to that the fact that revenue growth is not expected to keep pace with anticipated increases in Medicaid costs mandated by federal health care changes. To defray these costs, states will look to increase utilization of Medicaid managed care in place of traditional fee for service plans. At least 19 states decided to expand Medicaid managed care in 2011 and nearly all states will continue to consider additional proposals as they prepare for the projected addition of 16 million adults to the Medicaid rolls by 2014.

Redistricting

Only the four states with elections this calendar year (Louisiana, Mississippi, New Jersey and Virginia) were required to have redistricting completed this year. All four were approved in time for elections to take place on-time, but not without legal challenges. The deadlines for the other 46 states to finalize their maps are before state primary and general elections are held next year. While a number of other states have already redrawn districts, the threat of legal challenge have been ubiquitous in almost every case. Several legislatures have scheduled special sessions through the remainder o the year to tackle redistricting, but expect the debate to carry-over well into next year. The closer to a regularly scheduled election a given state redistricting battle gets, the more noteworthy an issue redistricting will become.

Tax Expansion and “Reform”

Legislators are wary of tax increases in good times—broadening revenues by raising taxes during an economic slump becomes a very hot-button issue. According to NCSL, 2011 marked the first year in the last ten that states reported lowering taxes more than they increased them. While the numbers may have been skewed by some large cuts or by the expiration of few temporary tax hikes, it demonstrates the pressure legislators feel when it comes to raising taxes.

Corporate tax rates have been cut in 20 states since the year began and 12 states lowered general sales tax rates. To make up for lost revenue from these and future tax cuts, states will get creative in identifying revenue streams by reforming business taxes, reducing or eliminating certain credits and exemptions and expanding the sales tax base.

One of the visible efforts taking hold is the move by many states to collect sales taxes from online retailers. Internet sales taxes have been a target for states for a number of years and its lean economic times that increase pressure to pursue it as a possible new revenue stream. Lawmakers in 15 states considered “Amazon Tax” style language this year. Numerous other states examined different approaches to capture this revenue. The legislation that passed in California, coupled with the recent agreement between the state and Amazon to begin collecting online sales taxes in 2013, may serve as a striking model for action elsewhere.

Despite only passing in five states, bills to the increase the taxes levied on alcohol and tobacco products were considered in 43 states this year. In addition, policymakers in nearly half of all states attempted to tax foods and beverages that are deemed to lack nutritional value.  Ostensibly designed to promote health, the taxes are earmarked to fund the healthy lifestyle and obesity prevention programs that have become a priority across the country.

Heath Care Debate Returns to States

February 3, 2010

The pendulum of health care reform has swung back towards state governments.  In the February 2, 2010, issue of the Wall Street Journal, Anna Wilde Mathews notes in her article “States Restart Health Care Push” (may require subscription) that the uncertainty of federal health care legislation has pushed reform back to the states.  Mathews correctly reports that, prior to the Obama administration, health care reform efforts were pursued primarily at the state level.  Massachusetts stands as the prime example of state reform.  California was expected to follow suit, but a poor economy and a wait and see approach due to the possibility of federal reform froze the progress of many state reform efforts under consideration.

While the absence of federal legislation may now inspire states to reconsider these proposals, budget necessities are forcing state legislatures to deal with health care issues in a more focused way than Congressional efforts.  Federal legislation included efforts to expand coverage as well as provisions aimed at “bending the cost-curve.”  Expanding coverage at the state level, either through state Medicaid and Children’s Health Insurance Program (CHIP) eligibility expansions or through comprehensive single-payer plans, is now off the table in most states due to budget concerns.  As a result, states are now targeting the cost factors that federal proposals postponed into later years or did not address at all.

State Medicaid plans are the largest factor in the push to control costs.  The stimulus bill provided states with increased federal matching funds for state Medicaid plans.  These matching funds were stipulated on states maintaining 2008 eligibility levels in these programs.  With this assistance ending December 31, 2010, it was possible that the states could escape, or at least delay, cost reduction efforts (including eligibility restrictions) until a recovering economy started providing additional state tax revenues.  As the recovery continues to move slower than expected, states are now facing the daunting task of funding their Medicaid plans with even lower revenues and less of a prospect for immediate federal help.

Budget gaps are forcing states to look at every option.  States are addressing pharmaceutical costs by creating new prior authorization requirements for certain drugs and encouraging the use of generics.  They are increasingly utilizing mail order systems and negotiating for lower reimbursement and increased rebates from pharmaceutical and medical equipment providers.  Health service providers are also receiving lower reimbursements, and some optional Medicaid services (dental, optometic, and others) are being eliminated altogether.  In addition to these reductions in services and reimbursement, plan enrollees are being required to pay more in co-payments and more states are looking at higher taxes on hospitals and insurers.  These efforts may forecast the policies the federal government adopts as Medicare costs continue to grow.

While coverage issues are largely on hold, states are acting under their authority as the primary regulators of the insurance market.  States continue to impose coverage mandates on health insurers, either through mandated benefits or, increasingly, mandated coverage for dependants in their 20s.  Nevertheless, reform proposals not addressed at the federal level are being considered.  Twenty two states have proposed constitutional amendments or other legislation that would prohibit an individual mandate to purchase insurance, as in Massachusetts, or limit the ability of the state to limit access to providers or health plans.  In addition, states have proposed measures that would allow residents to purchase plans available in other states, in effect eliminating their own mandated coverage requirements in an effort to make more affordable options available to consumers.

Robert Holden

February 2010


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