Health care reform update: States ponder possible changes to ACA

By Dana Beezley-Smith
July 24, 2018

affordable care actIt was mere hours after taking the oath of office that President Trump began taking aim at the Affordable Care Act (ACA).

“Pending repeal,” Trump’s executive order read, “it is imperative for the executive branch to ensure that the law is being efficiently implemented, take all actions consistent with law to minimize the unwarranted economic and regulatory burdens of the act and prepare to afford the states more flexibility and control to create a more free and open health care market.”

Thus far, the administration has granted some leeway for ACA enrollees themselves. Those with only one carrier option, for example, may immediately and without penalty terminate coverage. They may also drop policies that cover abortion.

But Trump is primarily asking state lawmakers to address their own coverage environments – and many are exploring changes.

In March of last year, then Health and Human Services (HHS) Secretary Tom Price encouraged the nation’s governors to apply for “Section 1332” innovation waivers. He highlighted state high-risk pools and reinsurance programs as opportunities to “lower premiums for consumers, improve market stability and increase consumer choice.”

ACA Section 1332 stipulates that a state may modify the law if its replacement model is federally deficit-neutral, provides access to quality health care at least as broad and affordable as before and covers a comparable number of the state’s residents.

States may petition to rework the individual and employer mandates, essential health benefits, cost-sharing limits, “metal” tiers (bronze, silver, gold or platinum) for health plans and premium and cost-sharing assistance.

States’ 1332 plans may not waive the ACA’s pre-existing conditions protections, free preventive health care benefits, coverage for adult dependents up to age 26 nor the ban on annual and lifetime coverage limits.

Only Hawaii’s 1332 plan was approved under the Obama administration. Since then, several states have either submitted or received approval for their proposals.

Alaska’s 1332 reinsurance plan created a single statewide risk pool, reducing 2017 premium increases from an estimated 43 percent to 7.3 percent.

Innovation plans have also been approved for Minnesota and Oregon, while plans submitted by Maryland, Maine and Wisconsin are awaiting HHS approval. Other state legislatures are weighing coverage options.

Experimentation may also be undertaken through the Medicaid program. Section 1115 of the Social Security Act allows states to test approaches that deviate from the program’s federal rules. As of May, eight states have implemented eligibility and enrollment changes and 20 have updated their behavioral health programs. New Hampshire, Indiana, Arkansas and Kentucky have enacted work requirements for able-bodied beneficiaries and seven other states are considering similar mandates. Twenty-four states have pending applications for program changes.

Price’s successor as HHS head, Alex Azar, told The New York Times that Medicaid work requirements don’t have to be onerous, as “work” often includes activities such as “volunteering, studying, education or work force training.”

Kansas’ plan to limit Medicaid benefits to three years, however, was deemed a bridge too far.

“People’s circumstances change,” said Centers for Medicare and Medicaid Services Administrator Seema Verma, “and we must ensure that our programs are sustainable and available to them.”

After Congress repealed the ACA’s penalty for failure to have health coverage, New Jersey passed its own version of the individual mandate, effective Jan. 1, 2019. Anticipated revenues of between $90 million and $100 million for noncompliance will fund a new reinsurance program for expensive ACA enrollees. Vermont recently passed a coverage mandate for 2020.

Three blue states are pushing back against the administration’s proposed expansion to 364 days of short-term, renewable health policies. California’s legislature wants to forbid sales altogether of short-term plans, while Hawaii lawmakers aim to outlaw the policies for residents eligible for ACA exchange coverage. Maryland has already passed legislation limiting short-term plans to 90 days.

The constitutionality of the ACA is being challenged by a coalition of 20 red states. Texas v. United States argues that the individual mandate was only found constitutional through Congress’ powers to levy taxes. Since Congress removed the taxation authority enforcing the mandate, plaintiffs contend, the entire law is invalidated.

Sixteen states and the District of Columbia have filed a motion to intervene in the lawsuit, citing the damage that would ensue were the ACA to be struck down.

In a June memorandum addressed to the court, the Justice Department requested a victory for the plaintiffs but not nullification of the entire law. Writing that the individual mandate is inseverable from the underwriting safeguards for those with pre-existing conditions, the administration asked that it be ruled unconstitutional, leaving intact the remaining structure of the ACA.

Many legal experts believe the suit will be unsuccessful. As George Mason University law professor Ilya Somin writes, “there is a big difference between a court choosing to sever a part of a law, and Congress doing so itself.” Congress “chose to leave the rest of the law in place.”

However, he adds, “The history of ACA-related litigation is filled with surprises and failed predictions by experts. So I have to admit it is possible this case will turn out in a way very different from what I hope and expect to happen.”

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Dana Beezley-Smith, Ph.D., is in private practice serving children, adults and families in Green, Ohio. Her email is:

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