Obama’s Second Term Means Major Health Changes in States

Although opposed by many Republicans, President Barak Obama’s re-election means that the overhaul of the US health-care system will move ahead in all 50 states.  Those state officials that have held off on implementing some aspects of the 2010 Patient Protection and Affordable Care Act will face pressure to act immediately.  State officials will now have 9 days to advise the federal government about how they plan to manage their state-run health-care exchanges that were created by the PPACA to help provide medical coverage to the uninsured.  If officials don’t comply, they face a de-facto US takeover of their insurance markets.

With Republican presidential candidate Mitt Romney promising to repeal the PPACA, all but 13 governors had waited to implement their plans.  Now those governors that “thumbed their nose” at the president must quickly regroup, said Mississippi Insurance Commissioner Mike Chaney, a Republican who said he will submit a plan for his state’s exchange by the Nov. 16 deadline.  

“The message to governors is the verdict is now in,” said Ron Pollack, executive director of Families USA, a consumer advocate that backs the law. “The Affordable Care Act is moving forward. Either they help cooperate with its implementation, or people in their state could be left out in the cold.” 

States not only have to play catch-up with Obama but with hospitals and insurance companies that are well-prepared for the new business.   Hospital chains and insurers have invested millions on new technology, marketing and plan development to compete in the new market. 

“Our priority for the organization is to get the organization ready to both comply with and play in target markets from an exchange standpoint,” David C. Cordani, chief executive officer of Bloomfield, Connecticut-based Cigna Corp. (CI), told analysts on a Nov. 1 conference call. “But we’re keenly focused on the amount of moving parts that exist within the regulatory environment and within the state and federal environment over the next two to three quarters.”

According to the U.S. Department of Health and Human Services, 34 states have accepted at least two grants from the federal government for the planning of their exchange.  This means that 20 states will be in a position to build an exchange or partner with the federal government on an exchange.  This is in addition to the 13, plus Washington, D.C., who have already stated that they will run their own exchange.  The rest “have either explicitly said ‘no’ or have taken so few steps that you can’t really see them shifting quickly enough to play an active role,” said Alan Weil, executive director of the National Academy for State Health Policy, which assists states implementing the health law, in an interview. 

Those governors who don’t comply and meet with the Obama administration’s deadline will see take over from the federal government to set up the exchanges in their states that will decide which insurers can sell plans to their citizens.  The federal exchange will also have control over enrollment of low-income people into the state Medicaid program.  

“We still haven’t seen proposed regulations in a couple of critical areas,” said Alissa Fox, senior vice president for lobbying and policy development at the Blue Cross Blue Shield Association in Washington, a trade association for 38 state Blue Cross and Blue Shield insurance companies. “What the states have to do and what the plans have to do, in designing and having products ready to market, a huge undertaking has to happen,” she said.

Obama’s win does away with any of the uncertainty about the PPACA that lingered since the law survived challenges in the U.S. Supreme Court.  Obama also has the advantage of retained control over the Senate, with a Democratic majority; which means anything legislation that attacks the PPACA passed by the Republican controlled house will be done away with in the Senate.  

Paul Keckley, the executive director of Deloitte LLP’s Center for Health Solutions research group in Washington said that with the threat of a repeal gone, Obama may be more lenient in the time lines and allow more flexibility.  Keckley also said that the administration might allow governors more time to set-up their exchanges or have a flexible definition for the exchanges to allow them to be set-up successfully.  He expects that few states will give up control of their exchange to the federal government.

“The federal government doesn’t want to run the exchange,” Keckley said in a telephone interview. “The federally run exchange was always meant as a backstop. To set up and run that federal exchange, they would have to go through the usual appropriations process in Congress. That’s a whole new battle, and I don’t think anyone in the administration is interested in that.”

Keckley says that one potential area of compromise may be what the benefit plans need to cover, currently allow states to use benchmark’s based on current small business plans. Obama may give states flexibility to define their benefits.

"President Obama has the opportunity to make bold leadership moves toward a bipartisan compromise on healthcare and the economy,” said Julie Barnes, director of healthcare policy at the Bipartisan Policy Center. "He has the standing to demand that each party see the investment all Americans have in reforming our broken healthcare system."