States on Obamacare Implementation: Washington Mandates and Uncertainty Remain

December 13, 2012

WASHINGTON, DC – The Subcommittee on Health today heard from federal and state officials on the “State of Uncertainty: Implementation of PPACA's Exchanges and Medicaid Expansion.” Nearly 1,000 days after the Patient Protection and Affordable Care Act was signed into law, states and members of Congress are still in the dark regarding the implementation and regulation of the health exchanges and Medicaid expansion established in the law, despite numerous requests for more information.

Health Subcommittee Vice Chairman Michael C. Burgess, M.D. (R-TX) said, “The administration has yet to explain how it will share information between three different federal agencies involved in determining eligibility for the exchange, how it will distribute the income subsidies to beneficiaries to purchase coverage in the exchange, or how a state will be able to afford the administrative costs to deal with eligibility changes.”

According to HHS, states must decide by tomorrow whether to allow the federal government to run their respective state exchange. Despite numerous pleas from states over the last several months for even basic information, HHS just this week released FAQs and talking points on the upcoming massive regulatory undertaking only three days before the states’ deadline.

At today’s hearing, Dennis Smith, Secretary for the Wisconsin Department of Health Services, explained that HHS provided too little information too late. Smith said, “Even with some of the additional limited guidance HHS provided earlier this week, PPACA represents massive disruption to the distribution system of health insurance. To participate, will the health plans be required to hold financial risk as well as medical risk?  Simply put, who pays and who collects?  At this point, we do not know how advanceable tax credits will be transferred from the federal Treasury to a health plan. Nor do we know how the low-income subsidies for cost sharing will be processed.  Insurers are struggling with great unknowns as to how to price their products. Without utilization data, it is difficult to determine rates that will be actuarially sound and competitive.  Everyone simply needs to know what the rules are in order to be compliant.”

Gary Alexander, Secretary of Public Welfare for the Commonwealth of Pennsylvania, expressed concerns regarding the lack of state flexibility that contradicts promises made by the administration. Alexander said, “A major weakness of the health-care reform law is that it fails to engage the states, the laboratories of democracy, as true partners. The law shows little faith in this important feature of the American federal system. The terms of the law are inflexible and heavy handed, with the federal government dictating to the states how things ought to be. Instead of trusting the states, the law creates a host of boards and commissions that serve to create even more rules and further removes decisions from the people by centralizing rulemaking by federal bureaucrats.”

Louisiana’s Department of Health and Hospitals Secretary Bruce Greenstein went beyond discussing the logistical process and questioned the effectiveness of the law’s exchanges. Greenstein explained, “The PPACA Exchange is a rigidly constructed enterprise that creates a vehicle for the federal government to tightly control the coverage options available to consumers, raising costs and limiting choice. Many employers will likely drop the health insurance coverage they currently provide to employees, leaving individual health care options to be determined by the federal government.”

In addition to his concerns with the exchanges, Greenstein said, “We have serious reservations about a blanket expansion of the existing Medicaid program without fundamental reforms to improve health outcomes, clinical quality and lower costs. In August of 2011, Republican governors provided 31 policy solutions to improve Medicaid. To date, we have yet to engage in a meaningful dialogue with this administration about the practical problems states have observed through their considerable experience administering the myriad of existing public assistance programs. Since the Supreme Court’s ruling, each governor and legislature is now faced with a decision regarding the expansion of the state’s Medicaid program. However, faced with a decision to expand within the limits of the current Medicaid model, it is not surprising that many states remain reluctant — even with enhanced federal funding.”

Burgess concluded, “There is a lot to be sorted out between now and the end of the year. The uncertain regulatory environment and the overall lack of response from HHS are not encouraging states or plans to move forward in cooperation with HHS. The time is running out. Meanwhile, the future of our health care system only becomes more uncertain.”

###