Health Benefit Recommendations Offer States Reform Incentives

By Robert Holden, Vice President

The Institute of Medicine (IOM) recommendations for Essential Health Benefits, released October 6, may have injected new life into state planning for health benefit exchanges during the upcoming 2012 legislative session. The IOM’s recommendations establish a process for identifying the benefits that will become the basis for health plans available to individuals, small businesses, and eventually to larger employers through each state (and any federal) health benefit exchange. The federal rules that emerge from this process will have a profound effect on insurance regulation in the states, as they will impact all state health insurance benefit mandates currently imposed on health insurance carriers.

Since the enactment of the Affordable Care Act (ACA), state policy makers have known that they would be required to pick up the cost of any state mandates imposed on plans offered through a state health benefit exchange that exceeded the federal essential benefits. As a result, states have already introduced legislation and established commissions to review state mandated benefits in anticipation of the federal rules. With the release of the IOM recommendations, it appears that states may have much more control of which mandate benefits they will be able keep.

States Pace Their Implementation Efforts on the Availability of Federal Guidance

The race towards the ACA’s 2014 deadline to implement state health benefit exchanges has become a “chicken or egg” process between state policy makers and the HHS, as states delay implementation while waiting for federal guidance. The release of federal rules on exchange governance came this summer, after many state legislatures had already adjourned. Federal rules on benefits are still pending, even as state planning and interim activity increases for the 2012 legislative session. States are particularly dependent on the HHS rules addressing essential benefits, as the ACA statute provides only broad benefit categories, such as “Prescription Drugs,” that must be made available in health plans. The IOM recommendations did not narrow the benefit categories for states, as IOM was authorized to provide the process for determining essential benefits and not the specific benefits themselves.

Opportunities for State Policy Makers

While state activity on specific benefits is still delayed, the IOM recommendations do offer some direction to state governments, starting with small group health plans. If it proceeds as recommended, HHS will begin with the benefits offered in a current, typical, small business health plan. These benefits will then be supplemented with additional required services so that each ACA benefit category is met. HHS will also develop an ongoing review process to account for future health technology advances and new benefits.

More importantly for state policy makers, IOM recommends that states have the flexibility to create alternative benefit structures, if they establish an exchange. Additionally, in comments made during the IOM’s release of their recommendations, it became clear that the IOM believes that states should decide how benefits addressing disabled and transitional Medicaid populations are structured. These recommendations not only give state officials additional flexibility and control over benefit mandates, they may provide needed incentive to continue implementing ACA exchanges. While it remains to be seen how states still considering their plans for implementation will react, this new incentive puts even more focus on the release of federal essential benefit rules and the formal authorization of states to create alternative benefit structures for their state exchanges.

2011 State Races Presage 2012 Vote

By Steve Arthur, Vice President

Updated October 5, 2011

While the Republican presidential debates have been the focus of the national media in recent weeks, there are state elections this fall that may provide some early indications about what may happen at the ballot box next year. 

One early indicator was this week’s special election in West Virginia to fill the remaining year of Joe Manchin’s gubernatorial term (Manchin was elected to the U.S. Senate in a special election last year.) Acting Governor Earl Ray Tomblin had been leading Republican Bill Maloney by huge gaps early in the race, but a Public Policy Polling poll released a day before the election showed Tomblin’s lead down to a single point. With the Republican Governors’ Association (RGA) airing a television ad tying Governor Tomblin to “ObamaCare,” an upset victory by Maloney would have shown that Democrats who supported the health care plan should continue to be worried. In the end, Tomblin was able to win a narrow 50%-47% victory.  Although, the lead paragraph of the AP story on the result said Tomblin won by “successfully distancing himself from the Obama administration and the president’s health care plan.”  This is not going to help Democrats sleep very well.

There are three other gubernatorial elections this fall, although the outcome of those races does not seem in doubt. Republican Governor Jindal is an overwhelming favorite to win a second term and may very well do it by winning over 50% in the open primary on October 22. In Kentucky, Democratic Governor Steve Beshear is now leading his Republican opponent by 31 points in a new WHAS/Courier-Journal poll and should have no trouble winning re-election. And in Mississippi, Republican Lt. Governor Phil Bryant should cruise to victory in his race against Hattiesburg Mayor Johnny DuPree.

While the Mississippi Governor’s race may not keep people up late on Election night, the state House of Representatives races might.  With the Mississippi Senate already controlled by Republicans, Democrats want to maintain control of the State House.  However, as the Wall Street Journal has reported, Republicans are making a major effort to take control of that body for the first time since Reconstruction. They have brought in a campaign strategist who led the Republican effort in North Carolina to take control of that state’s legislature. Eight seats need to change from (D) to (R) in order for Republicans to take control, and if they don’t succeed in flipping the chamber, I believe they will come very close.

In Iowa, a special election will be held November 8 for a State Senate seat that became vacant when Governor Branstad’s appointment of Democratic Senator Swati Dandekar to a state board. As the Des Moines Register reports, the Senate district has more registered Republicans than Democrats, so it is a prime target for a party switch. What makes the seat especially important is that Democrats currently have a one seat majority in the Senate, so if Republicans were to win the seat, the chamber would be evenly divided between the parties. There is no mechanism to break ties in the Iowa Senate (Lt. Governor has no role), so a power sharing agreement will need to be reached if the seat flips. Again, with Republicans much more enthusiastic about voting nationally than Democrats, the GOP could take another chamber away from Democratic control, even if it is just to an even split.

Finally, Republicans are making an all out push to take back control of the Virginia State Senate, which they lost in 2007. They would need to take 3 seats from the Democrats to regain control, and they are making a major push to win those seats.  Governor McDonnell, whose victory in 2009 began the Republican resurgence after the drubbings they took in 2006 and 2008, has been actively involved in the effort to take back the Senate according to the Roanoke Times. Taking three seats may be tough, but again, the enthusiasm gap Republicans currently enjoy might be enough to make that happen.

Any single race can be dismissed by the losing party as a fluke, but Democrats should take some comfort in the West Virginia victory.  However, a 3 point victory in a state with a 2-1 Democratic advantage is not something I would point to as a harbinger of better times ahead.  If the Republicans are able to run the table on the legislative races – taking control of the Mississippi House, Virginia Senate and winning the special election in Iowa—Democrats should remain very concerned about their prospects in 2012.

2011 Session Wrap: States Introduce Less and Pass More in 2011

By Josh Veverka, Vice President

As the summer months approach, the 2011 State Legislative season is coming to a close. As of June 1, 28 states have adjourned regular legislative sessions. 

What have we learned so far? Budget shortfalls and the tide of partisan changes in the 2010 election cycle have influenced the legislative activity in the states.

At the start of 2011 a number of factors set the table for an unprecedented and unpredictable legislative season. Twenty-one state legislative chambers changed majority control from Democrat to Republican, and Republicans picked up 11 Governorships. States were facing huge budget shortfalls.  And no one knew what effect the Tea Party movement would have on getting things done in the legislatures.

So looking back – how did these factors affect the productivity in the state legislative chambers?

On average there has been a 10% decrease in the total number of bills introduced during the 2011 session compared to the 2009 session. 

However, in some cases, where states introduced fewer bills, legislators were actually successful in passing more measures than in previous sessions. Hawaii introduced 300 fewer bills, but passed 50 more bills than in 2009. Indiana legislators introduced 100 fewer bills and passed nearly 50 more. Mississippi considered 450 fewer bills, but passed nearly 100 more bills than in the 2009 session. Other states like Arizona, Florida, Idaho, Kentucky, Nebraska and Texas also saw similar results.

In addition to these increases in the total number of enacted bills, all states have seen a slight increase in the rate of enactment of legislation. In 2009, these states combined to enact 21% of all legislation considered.  In 2011, the same states have enacted over 22% of the bills considered.

One of the main contributing factors to the decrease in total legislation is the impact of state budget situations and the current economy. Legislators may have been hesitant to introduce new programs for lack of funding, or impose new taxes and fees to pay for these programs. But the increase in the rate of bill passage shows more consensus in the states.

This consensus is borne out of stronger partisan bonds. In most of the states mentioned above, single party control, and a stronger majority allowed legislative leadership to streamline the agenda of bills for consideration. In other states, fewer bills being introduced may have allowed for more debate on viable proposals which were eventually passed.

Similar trends can be seen in additional states still in session, but we won’t know the full impact until the last states adjourn at the end of the year. 

Have you observed similar trends in your states?  What other factors may have led states to consider less, but pass more bills?  And do you think this trend will continue?