Health Care In A State of Flex

By Robert A. Holden, Esq., Senior Vice President

In recent statements to the National Governors Association, President Obama indicated that he believes there is an opportunity for flexibility in how the Patient Protection and Affordable Care Act (PPACA) is implemented. For many of the assembled Governors, the offer of flexibility he made was not what they had requested.

During his remarks, the President pointed out that there is flexibility already in the PPACA, taking time to note that in 2017, three years after the state exchange implementation and Medicaid expansion deadlines have passed; states would have the opportunity to scrap the system they had developed under PPACA requirements and seek approval for a new plan. The President was clear that his administration would be pleased to approve these plans, so long as the states’ maintained coverage for the same number of people, with no decline in service quality, and at no additional cost to the federal government. Perhaps sensing some urgency in the room, the President also voiced his support for potential legislation that would move this offer up from 2017 to 2014.

In some ways the President’s comments may have been a response to a February 7, 2011, letter twenty Governors sent to HHS Secretary Sebelius asking for flexibility in implementing PPACA reforms in their states. If so, the utility of the provision he highlighted, even if moved up three years, does not address the pressing fiscal issues affecting the states now. Seeking to slip out of the fiscal vise created by restrictions on reducing Medicaid eligibility and requirements to maintain benefit levels, the Governors made specific policy requests. These included an option to move non-disabled Medicaid beneficiaries into health care exchanges for insurance coverage without the need of further HHS approval; a comprehensive plan for fully funded federal subsidies for exchange participants; and a new assessment of the population that will utilize the state exchanges and Medicaid and their cost to state governments.

In light of their budget realities, state policy makers are caught between the need for more federal funding and direction, and a desire to escape potentially unfunded federal mandates. In the short term, states have found opportunities to maximize federal assistance by replacing state programs with Medicaid expansions, and even state governments ideologically opposed to federal health care reform are keeping the implementation ball rolling in order to capture federal grant money. Nevertheless, the states will need some specific cost saving flexibility from the administration to make implementation a reality.

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