The Insider: Implementation Nation
Although the national media spotlight has moved on, the work of health care reform is only beginning. Today we look at some of the recent developments in Massachusetts—which is sort of a health reform “beta site”—and what they tell us about reform in the rest of the country. We’ll also examine one of the early implementation provisions: the temporary high-risk pool.
Massachusetts: The gift that keeps on giving
Throughout the debate on national health care reform, Massachusetts has played an outsized role. The bipartisan nature and popularity of reform in the state, its success at reducing the number of uninsured, and the prominent role Massachusetts pols from both parties played in the national reform saga have all helped to make what happens in the Bay State unusually significant. This is likely to continue to be true going forward.
Because Massachusetts is farther down the implementation path, it has already encountered issues that will come up in other places. Three recent developments in Massachusetts highlight the state’s continuing relevance to the reform debate.
The first is the controversy over insurance premium rate hikes. Earlier this spring, the Massachusetts Division of Insurance denied dozens of premium rate increases as being excessive. (See the Boston Globe article.) The ruling led to a court challenge by insurers and a brief insurance “strike” as Massachusetts insurers took their plans off the market. (Since the court refused to grant the insurers a preliminary injunction most plans are again available). Although this preliminary ruling went against the insurers, there is no guarantee about the final outcome.
The takeaway? Insurers will play hardball to resist downward pressure on premiums. States need strong tools and political will to fight back. An effort to beef up premium oversight had to be stripped from the final national health reform bill because it did not fit within the rules of the budget reconciliation process, but a stand-alone rate regulation bill is being championed by Sen. Diane Feinstein. A hearing is scheduled for this Tuesday in the HELP committee, but odds of passage are uncertain, since it’s likely that Republicans will present a united front in opposition, making it hard to get the necessary 60 votes. In the absence of federal authority, advocates may want to turn their attention to strengthening state oversight.
A second issue to hit the Boston media recently also has lessons for national reform. Insurers allege that there is a group of people taking advantage of continuous open enrollment to purchase non-group insurance for a short period of time, schedule costly medical care, and then drop out. Like so much of national reform, this claim comes with a heavy dose of politics attached, since the charges are being made by a former insurance industry exec who’s running for governor.
These “short-stayer” allegations have yet to be substantiated. So far insurers have not provided data which shows what medical care alleged short-stayers are using, whether or where they were previously insured, and whether the problem is growing or actually diminishing. The Division of Insurance is studying the issue and its report is expected soon.
Meanwhile, we can and should expect insurers to fight to undermine the impact of guaranteed issue by narrowing access to insurance. This battle will be fought first at the federal level as HHS determines the initial and subsequent enrollment periods, and it’s critical that consumers push back to make sure that insurance remains as accessible as possible.
The third implementation issue in Massachusetts with implications for the states is one that has received no media attention (and was not heeded by federal lawmakers during the debate): When it comes to helping people make informed choices among competing insurance plans, standardizing actuarial values is simply not enough.
Within any given benefit tier (gold, silver, etc.), insurers can vary cost-sharing arrangements so much that comparison remains difficult. Focus groups in Massachusetts show what those done by national organizations do: What people want is better choices, not an infinite number of choices. And so after several years of experimenting with actuarial value, the Massachusetts Connector has moved to standardize benefits. Federal law does not require states to create standard benefits, but it does not prohibit it, either. Nor is there any reason that standardization has to wait for the 2014 kick-off of health insurance exchanges. Advocates should consider pushing for greater standardization in their state markets now.
High-Risk Pool rules present states with tough decisions
One of the first provisions of national health care reform slated to be implemented (90 days after passage) is the creation of a temporary high-risk pool (HRP) for those excluded from coverage due to a pre-existing condition. As welcome as this new program is, given that most existing state high risk pools perform poorly, it may prove difficult to effectively integrate the new program with existing state law.
PPACA establishes a set of rules for both the federal HRP and any existing state pool that wants to tap into the $5 billion in federal support made available by health reform. These rules include setting a minimum actuarial value and out-of-pocket maximum for HRP coverage. They also prohibit the imposition of pre-existing condition exclusions, require rates to be the same in the HRP as in the market generally, and set a limit on age rating of no more than 4-1. All of these are welcome changes.
However–and it’s a big however–federal law also restricts eligibility for the HRP to those who have been uninsured for at least six months. While this provision is designed to prevent people from dropping existing coverage to enroll in the federal plan and to help stretch federal dollars, it also creates some problems. Consider these four types of states:
States with no HRP and no guaranteed access to insurance in the non-group market–For these states there is no problem: Either the state will set up an HRP that meets federal standards, or the federal government will set up a pool on behalf of the residents of that state. End of story.
States with an HRP that is worse in all respects to the federal law—A state could “true up” its program to meet federal requirements, or it could do nothing, in which case the federal government would set up a parallel program.
What happens then? Everyone with a pre-existing condition (who can afford the premiums) can enroll in the federal program except those who are already enrolled in the state HRP. They either have to take the risk of going without coverage for six months, or remain locked into inferior and costlier coverage in the state pool. States with an HRP that does not require a six-month wait–Even if a state pool is as good as or better than the federal requirements in most respects, the requirement for a six-month waiting period could create problems.
In general, states can run a program that is better than the federal program if they choose. But, if states do not impose a six-month waiting period, their program will not qualify for federal assistance.So they have the choice: either impose a new access restriction on people with pre-existing conditions, or set up a parallel pool (or allow the federal government to). In the latter case, those who can take a chance on going without coverage for six months could join the federal pool, while those who could not would retain or join the state pool, leading to a generally sicker pool of enrollees in the state pool.
States that already have guaranteed issue and modified community rating in their non-group market–A number of states, including New York, Maine, Vermont and several others have already eliminated pre-existing condition exclusions instead of having a high risk pool. However, because of the six-month no-coverage requirement it’s unclear if these states would benefit at all.
Regulations for how states should implement the HRP provisions are expected very soon from HHS, but it’s unclear whether the Secretary has the authority to address these problems, or if the solution requires a Congressional fix.
Coming next time: Repeal Watch!
–Michael Miller, director of strategic policy