PSN 2011 Health Care Roundup: Despite Opposition, States Move Forward on ACA, Look to Strengthen Health Security for All


(Note: With legislative sessions largely adjourned in statehouses across the nation, this week’s Dispatch is the fifth in a series of issue-specific session roundups from Progressive States Network highlighting trends in different critical policy areas across the fifty states.)

In 2011 state legislative sessions, lawmakers across the nation in search of common-sense solutions found themselves wrestling with dual challenges on almost every issue: historic budget shortfalls and a charged and starkly changed political climate resulting from an historic wave election in 2010 that saw conservatives take control of 20 new chambers. Both of these factors were front and center on health care measures, as responsible lawmakers joined in the face of these challenges to advance the efficient implementation of the Affordable Care Act, protecting the health security of the most vulnerable and advocating loudly for effective reforms in their statehouses, the courts, and the court of public opinion alike.

From moving forward on implementation of the state-based exchanges at the heart of the ACA in a manner that protects consumers and provides true competition, to fighting to save Medicaid from privatization and families from devastating cuts to their coverage, to defending provisions of the health law that benefit the middle class from attacks launched by ideological groups like the pro-corporate American Legislative Exchange Council (ALEC), state legislators seeking real health security for their constituents braved the storm in 2011 – and promise to turn the tide in 2012.

States Move Forward on Creation of Health Care Exchanges in 2011

Scheduled to come on line in 2014, state-based health care marketplaces, or “exchanges” are central to the Affordable Care Act’s efforts to expand insurance coverage for families and provide choice and competition to consumers. Despite an onslaught of misinformation unleashed in an effort to scuttle implementation of the exchanges, 38 states (as well as Washington, DC) introduced legislation advancing the implementation of exchanges in 2011 sessions – 10 of which were enacted into law – according to the Center on Budget and Policy Priorities:

State Legislation on Exchanges

[Map by Center on Budget and Policy Priorities]

Legislation to establish exchanges has now been passed or enacted in California, Colorado, Connecticut, Hawaii, Maryland, Nevada, and Oregon. Bills to do so remain pending or tabled in Illinois, Maine, New Hampshire, New Jersey, and Washington DC. In addition, seven states passed or enacted bills to establish study panels or commissions or otherwise indicated their intent to create an exchange.

All in all, at least 31 states have now developed one or more task forces, commissions, or boards to study and/or give recommendations on the implementation of the ACA, according to tracking by the National Conference of State Legislatures (NCSL), including many who have done so through actions by the executive branch.

In addition, the vast majority of states have also received grants from the Department of Health and Human Services in 2010 and 2011 to support the planning and establishment of exchanges:

2010 and 2011 Exchange Grant Awards

[Map by Center on Budget and Policy Priorities]

Over the past two years, a total 13 states have passed legislation to create health insurance exchanges, joining Massachusetts and Utah, which had formed exchanges prior to the enactment of the ACA in March 2010.

As states learn more about the federal government's expectations and observe existing exchange models, experts predict a flurry of activity in the next session from state legislatures. Steve Larsen, director of the Center for Consumer Information and Insurance Oversight at the Centers for Medicare and Medicaid Services, agrees that recently released regulatory guidelines will spur even more states into action. "As states look more closely at regulations that we put out in the next phase to come, I think you'll see a lot more activity to build on what's already going on," he said at a recent event co-sponsored by the Bipartisan Policy Center, the Kaiser Family Foundation and the University of Virginia.

Different Approaches to Exchanges Emerge
Under the Affordable Care Act, states have until 2013 to notify the federal government whether they will be creating their own exchange – the federal government will operate exchanges for the residents of states who choose not to implement their own. Given this knowledge, and with the calendar ticking away, even states that are currently attacking the health law in federal court recognized the need to begin the process of implementing exchanges in 2011. Unsurprisingly, many of those states are now approaching implementation by advancing weak models for these marketplaces that benefit their insurance industry allies. Meanwhile, legislators and policymakers focused on strengthening the health security of families advanced starkly different models for exchanges in 2011 that arm the bodies with the authorities and tools needed to lower costs, expand coverage, and protect consumers.

In advance of 2011 sessions, Progressive States Network highlighted two key areas of focus for legislators interested in building competitive marketplaces: the structure and governance of the boards that would be responsible for overseeing the exchanges. California, the first state to enact legislation to form a health insurance exchange after the passage of the Affordable Care Act in September 2010, included language in their bill specifying that board members “may not be affiliated with any carrier, agent, broker or health care provider, be affiliated with a trade association of one of these groups, or be a provider (unless they do not receive compensation) while serving on the Board or staff of the Exchange." Other states that enacted exchange legislation neglected to include these types of protections. In Virginia, Governor Bob McDonnell appointed members to a newly established Virginia Health Care Reform Initiative Advisory Council in August 2010, a group comprised of representatives from the legislature, health care delivery, health insurance and the business community. A poll in neighboring North Carolina this May showed strong voter opposition to an exchange bill (H115) that would have given insurers seats on their state’s exchange board, with 69% opposed to seeing such a potential conflict of interest enacted into law. Yet even in the face of this strong public opposition, the flawed bill was passed by the state House.

Two states that advanced effective models of exchanges in 2011 included Connecticut and Washington. Connecticut’s SB 921 established a state health insurance exchange that prohibits anyone from serving on the board of the exchange who is affiliated with an insurer, or broker, health care provider, health care facility, or a related trade association. (Despite this restriction, state advocates voiced concern that there was no consumer representative on the board after its initial members were announced in August.) Connecticut’s Sustinet legislation, while scaled back from some of its original goals, also allows non-profits and municipalities to buy into the program, and establishes an advisory board to make policy recommendations to the governor and to evaluate future “private or public mechanisms that will provide adequate health insurance products.” This could still potentially include a state public option, which was not part of the legislative language passed this year due to strong opposition by an insurance industry largely centered in the state, but which, if passed this year, would have been estimated to save Connecticut taxpayers $355 million by 2014.

Washington state’s exchange legislation (SB 5445) passed in strong a bipartisan vote and was signed into law by Governor Gregoire in May as part of a package of six bills intended to conform state laws to the ACA, extend coverage, improve care, and lower costs. After their enactment, Sen. Karen Keiser (D-WA), a sponsor of many of the implementation bills, highlighted how they “tie together to create a new and better way to deliver health care in Washington state,” noting that their enactment was “critical for all Washingtonians, but does not mark the end of our efforts.” Washington’s exchange legislation created a non-governmental public-private partnership which calls for a nine-member governing board nominated with input from both the governor and both houses of the legislature, and which is required to include at least one representative of health consumer advocates. The other related bills aligned Washington state law to meet the patient protection requirements in the ACA, required state-purchased health care programs to implement evidence-based guidelines and to shift away from a fee-for-service model, and increased transparency of rate filings by insurers.
Vermont passed perhaps the most historic and far-reaching state health care law this year. HB 202 aims to establish their state exchange so that it provides the foundation for an eventual single-payer system. In signing the bill into law, Governor Peter Shumlin spoke proudly of launching “the first single-payer health care system in America,” and of aiming “to do in Vermont what has taken too long: have a health care system, the best in the world, that treats health care as a right, and not a privilege." The program, Green Mountain Care, plans to contain costs by streamlining all administration of state health care programs into one single system. A state single payer system, if instituted, is estimated to save approximately $500 million in the first year while saving consumers 25%. However, the law does not allow the state to enact a true single payer system until 2017, when it can take advantage of a provision of the ACA that allows states to opt out if they implement other systems that meet the federal law’s benchmarks for coverage.

State-based exchanges themselves should not be inherently politically controversial. Massachusetts and Utah, the two states to enact exchanges before passage of the ACA in 2010, both did so under Republican governors, and a similar market-based approach was promoted over the past decade by conservative think-tanks like the Heritage Foundation well before it became a central piece of the ACA. This, and the knowledge that the health law is here to stay and states should take advantage of the opportunities it provides to innovate and build programs that fit their own needs, may explain why many states with conservative leadership calling for repeal of the entire federal law are also hard at work on implementation of their exchanges, and why efforts at implementation were supported in a bipartisan manner in many states in 2011.

Protecting Medicaid: Ensuring Health Security for Low-Income Families and Seniors

One of the primary ways in which the Affordable Care Act expands coverage is through the expansion of Medicaid to cover individuals with incomes up to 133% of the poverty line. Yet with state budgets under historic pressures in 2011 from revenue declines due to the Great Recession, and with the political debate in Washington D.C. focused on cutting deficits instead of growing jobs, Medicaid found itself on the chopping block both in Congress and in statehouses across the nation in 2011.

A key part of the slash-and-burn deficit reduction included in U.S. Rep. Paul Ryan’s (R-WI) federal budget proposal in February was the implementation of Medicaid “block grants” to states that if enacted would replace the current jointly-financed model of Medicaid and directly impact the health security of roughly 58 million people across the nation. In an analysis earlier this year, Edwin Park of the Center on Budget and Policy Priorities concluded that such grants would “shift costs and risks quite significantly to the states, to tens of millions of low-income Medicaid beneficiaries, and to the health care providers that serve those beneficiaries.” Other studies have also confirmed the severe detrimental consequences of converting Medicaid to block grants – both to low-income families, and to seniors and people with disabilities at all income levels. Families USA released a report and accompanying state-by-state fact sheets in May showing how more than a quarter of all seniors and people with disabilities in the nation – over 16 million – depend on Medicaid, and how Medicaid has been a critical source of coverage for people who need nursing home care (in seven states, the number of nursing home residents covered by Medicaid as a primary payer was over 70%).

A survey by the Kaiser Family Foundation in early 2011 found that the provision in the 2009 Recovery Act that prevented state cuts to Medicaid coverage as a condition for receiving funds largely succeeded in its goal, protecting the health security of countless families who found would likely have otherwise found themselves without coverage due to job losses during the recession. But as federal stimulus funds expired at the end of state fiscal years this summer, cuts to Medicaid loomed large in the public debate. Medicaid funding became a favorite target of many conservative legislators during sessions this year, as they promised proposed to deeply cut, privatize, and even eliminate the program entirely.

In New Jersey, Gov. Christie asked for a waiver from the federal government to cut state spending on Medicaid by $300 million, including cuts to long-term care, which would have affected 1 million people in the state currently covered by the program. The high-profile fight over Wisconsin Gov. Walker’s budget and its assault on workers’ rights often overlooked that the budget “fix” also included a $1 billion cut to health care programs that serve the disabled, elderly, and low-income residents currently served through BadgerCare, the state’s Medicaid program. In Louisiana, Gov. Jindal proposed a plan that would hand over to $2 billion of taxpayer money to private corporations to run the state’s Medicaid system, with little evidence of savings to show for it, and through a process that, as one state reporter put it, “proceeded with minimal public debate and without even our elected representatives approving a plan.” A coalition of over 100 organizations in Florida stood up strongly against similar efforts to privatize their state’s Medicaid program, saying they would “jeopardiz[e] access to critical health services for our poorest seniors in nursing homes, children, and persons with disabilities, leaving their care in the hands of profit-driven plans.” And some state legislators in Texas actually floated the idea withdrawing their state from the program entirely.

In total, roughly 15 states around the nation attempted to cut their Medicaid programs in some form in 2011 – and the push for further cuts shows little sign of slowing down in 2012. Conservative governors have already launched a joint effort to attack Medicaid next year, including the repeal of the “maintenance of effort” provision that has so far stopped many states from dramatically reducing their Medicaid rolls. With the resolution of the debt ceiling dispute in Congress and the formation of a “Super Committee” set to consider even further cuts that may trickle down to the states (Tennessee is already considering a worst-case scenario of 25% cuts to their TennCare program given the potential for federal reductions), protecting the health security of the millions who are covered by Medicaid will clearly remain a chief priority of state lawmakers throughout sessions next year.

Defending Against Onslaught of Attacks in States, Courts

In addition to the attempts to defund Medicaid, state lawmakers found themselves playing defense against a slew of attacks on the Affordable Care Act and a number of health care related issues. In the courts, in statehouses, and even in Congress, state legislators came together to stand up and fight for the constitutionality of the ACA and to defend the hard-fought victories for consumers in the law.

At the beginning of 2011, the new conservative leadership of the House of Representatives attempted – and failed – to overturn the ACA in one of the first scheduled bills up for a vote in the new Congress (HR 2). Members of the Working Group of State Legislators for Health Reform pushed back strongly, denouncing the repeal effort and urging members of their own delegations to oppose it as well. Sen. Nan Orrock (D-GA) argued that “Georgians want, need, and deserve quality affordable health care that cannot be taken away,” and asked Congress to “think about the people who sent them to Washington, people who want and need health care coverage, and protection from insurance industry abusive practices” before voting on repeal.

Repeal efforts have not been limited to Congress – they have also targeted the states. Since the passage of the ACA, the American Legislative Exchange Council (ALEC) and their corporate allies have led an effort to, as they put it, “Repeal Obamacare” through the states, which has included the distribution and attempted passage of resolutions (often titled “Health Care Freedom Acts”) declaring that states have the right to nullify federal law. Those efforts, many largely symbolic, widely failed in 2010, and saw limited success in 2011 as the political furor over the bill receded. Overall, the past two years have seen a total of 17 states pass binding legislation opposing health care reform, out of a total of 44 states where measures had been filed. In an article for The Nation, Dr. Wendell Potter explained ALEC’s health care agenda as amounting to “a comprehensive wish list for insurers: from turning over the Medicare and Medicaid programs to them – assuring them a vast new stream of revenue – to letting insurers continue marketing substandard yet highly profitable policies while giving them protection from litigation.”

In addition to repeal attempts in Congress and through the states, a host of lawsuits challenging the constitutionality of the health care law have been winding their way through federal court system since the moment the law was enacted in 2010, and appear to be on their way to the Supreme Court. A total of 26 federal lawsuits have been filed seeking to overturn the ACA, with many dismissed for lack of standing or due to procedural problems. Six cases have resulted in district courts upholding the constitutionality of the law.

At the appellate level, results have been mixed, ensuring that the Supreme Court will almost certainly hear and rule on the case next year. On June 29th, the 6th Circuit Court of Appeals ruled that the ACA, including the individual mandate, was constitutional. Just over a month later, on August 12th, in perhaps the most closely-watched case against brought by Attorneys General of Florida and 25 other states, the 11th Circuit Court of Appeals ruled in a 2-1 decision that the individual mandate was unconstitutional, but also that the rest of the law could stand. In arguments during that case in April, 154 state legislators from 26 states joined together with the Constitutional Accountability Center to file an amicus brief strongly supporting the constitutionality of the law. Commenting on the filing of the brief, Sen. Jack Hatch (D-IA), Chair of the Working Group of State Legislators for Health Reform, spoke for the many legislators who had signed on in support of the law, noting that "it is clearly the federal government's responsibility to address national concerns and protect the American people, and legislators across the nation are saying this law is not about government overreach but about protecting the health security of their constituents.”

In addition to ACA repeal efforts, state legislatures were also the sites of unprecedented attacks on women’s reproductive rights in 2011, with at least 80 new provisions enacted that restrict access to abortions this year – more than double the previous record.

Turning the Tide on Health Care in 2012

Despite the continuing attacks on the Affordable Care Act, the level of political rancor surrounding health care has declined significantly since the contentious town halls in the summer of 2009. In fact, the latest Kaiser Family Foundation tracking poll shows that, while levels of public awareness about the ACA and its provisions continues to be troublingly low, the temperature surrounding the issue has died down significantly. On the positive side, recent polling also shows that the individual provisions of the ACA continue to be very popular, and that a strong majority of voters do not want to see it repealed or defunded. Consumers and voters are reassured when they are reminded of two central provisions of the law: that it will make their family’s health care more secure by ending denials for pre-existing conditions, and that members of Congress will be required to get their healthcare from the same place as millions of Americans.

Major health care challenges await state legislatures in 2012, from the continuing calls for the repeal or defunding of the ACA, to attempts to cut Medicaid, to the difficult but extremely important work of building state health exchanges that will deliver for consumers. This work is already underway, and some of the initial signs are promising. At the National Conference of State Legislatures annual summit last month, health care advocates were well prepared and won important policy victories – this despite a rightward shift in the legislators attending the conference following the conservative wave in November 2010 elections. NCSL’s Health Committee, comprised of lawmakers from both parties and around the nation, passed language calling for strengthened state-based Medicaid programs and ensuring strong state-based health care exchanges, following a year in which Progressive States Network worked closely with state legislators to advance strong, common-sense policies under the Affordable Care Act to ensure the health security of families – momentum which will hopefully continue in 2012 sessions.

(Charles Monaco, Devin Boerm, and David Fegley contributed to this Dispatch.)


Full Resources from this Article

PSN 2011 Health Care Roundup: Despite Opposition, States Move Forward on ACA, Look to Strengthen Health Security for All


Center on Budget and Policy Priorities – Status of State Health Insurance Exchange Implementation
Center on Budget and Policy Priorities – Medicaid Block Grant Would Shift Financial Risks and Costs to States
Commonwealth Fund – State Health Insurance Exchange Legislation: A Progress Report – Initial Guidance to States on Exchanges
Families USA – Cutting Medicaid: Harming Seniors and People with Disabilities
Guttmacher Institute – State Center
Kaiser Family Foundation – Expanding Medicaid under Health Reform: A Look at Adults at or below 133% of Poverty
Kaiser Health News – How Medicaid Block Grants Would Work
Kaiser Health News – Scoreboard: Tracking Health Law Court Challenges
National Academy of Social Insurance – Designing an Exchange: A Toolkit for State Policymakers
National Conference of State Legislatures – State Actions: Health Insurance Exchanges
National Conference of State Legislatures – Health Reform State Implementation Entities
National Conference of State Legislatures – State Legislation and Actions Challenging Certain Health Reforms, 2011
Progressive States Network – Blueprint for Economic Security 2011: Health Security
White House – State Legislators: What They're Saying About the Affordable Care Act
This article is part of PSN's email newsletter, The Stateside Dispatch.
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