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How States Fare Under Obama’s Health Reform Blueprint

This week, President Obama released his blueprint for comprehensive health care legislation.  The plan 's release means Obama can outline the specifics of what he wants to see in a final bill for the first time.  Many political observers see the decision to outline specifics as not only a jump start to move health care reform across the finish line but also as a stamp of approval for the Senate to use a majority vote through the reconciliation process, a strategy which appears to be gaining momentum.

Largely following provisions in the Senate bill passed in December, the President's plan will:

  • Establish state exchanges rather than creating one national insurance exchange;
  • Extend coverage to 31 million people who are currently uninsured, at a cost over 10 years of $950 billion — more than the $872 billion the Senate would have spent, but less than the $1.05 trillion for the version passed by the House;
  • Exclude a public option.

The President’s proposal does decrease the states’ share of Medicaid costs:

  • The Senate bill provides federal support for state Medicaid programs but does so in a way that would vary from one state to the next. The President’s proposal replaces this with uniform 100% federal support for all States for newly eligible individuals from 2014 through 2017. It then moves the federal support to 95% for 2018 and 2019, and to 90% for 2020 and subsequent years. This approach resembles that of the House bill, which provides full support for all States for the first two years, and then 91% federal support thereafter.
  • States that have already made investments in helping the uninsured by expanding Medicaid to adults with income below 100% of the poverty level will, beginning in 2014, also receive an increased matching rate on certain health care services by 8 percentage points.
  • Obama’s plan also provides additional assistance to the Territories, raising the Medicaid funding cap by 35% rather than the Senate bill’s 30%.

New Federal Entity to Oversee Insurer Rate Increases:  No doubt influenced by the shocking premium increases in California and in other states, the President’s plan would establish a new process for reviewing increases in health plan premiums. If a rate increase is deemed unreasonable or unjustified, the insurer would be required to lower premiums, provide rebates or take other actions to make premiums affordable. A new Health Insurance Rate Authority would provide federal oversight, help states determine how rate review will be enforced, and monitor insurance market behavior.  Like the Senate bill, the White House proposal would provide grants to states to support efforts to review and approve premium increases.

While at least 25 states have some “form of a prior approval process for premium increases,” state governments often lack the resources or political will to keep insurers in check, so the new federal authority is both politically and substantively significant in helping protect consumers from unreasonable rate increases. The provision will kick in immediately and will also prohibit insurers from dramatically increasing rates during the period between the passage of comprehensive reform and implementation.

Today, we will all be witness to the bipartisan summit on health reform.  But regardless of the outcome, state legislators can keep the pressure on for reform by moving state proposals that highlight health insurer abuses and exorbitant profits, expand access and affordability, and reduce costs to both states and consumers.

Resources:
White House.gov - President Obama's Health Care Reform Proposal
Kaiser Family Foundation - Side-by-Side Comparison of Major Health Care Reform Proposals
Families USA - A Closer Look at Republican Health Care Proposals
Families USA - The Facts About Prior Approval of Health Insurance Premium Rates
Commonwealth Fund - States Wait for Word on Federal Medicaid Help
Herndon Alliance - Consensus Message Document on Fixing Health Care
Center for American Progress Action Fund - Wellpoint Raising Rates by Double Digits in at Least 11 States
Health Care for American Now - Health Reform Provides Critical Long-Term Help to States