Home – States Grapple with Complexities of Health Reform

States Grapple with Complexities of Health Reform

 It has been just over two years since President Donald Trump famously bemoaned the complexities of the American health care system, telling a meeting of the nation’s governors that “Nobody knew health care could be so complicated.”


It goes without saying that health care’s monumental complexities were not news to the governors, nor really to anyone else. The system’s many layers and players in fact make even minor reforms some of the most complicated and challenging tasks facing lawmakers today.


Not that it has stopped anyone from trying. Governors and lawmakers in statehouses across the country are currently weighing a plethora of health care proposals, including but not exclusively focused on the Affordable Care Act, Medicaid expansion, single-payer health care systems and the high cost of prescription drugs.


To better understand how a few of these proposals fit into this year’s broader legislative picture, we sat down recently to talk about several of them with two of the nation’s most respected voices on health care: Diana Dooley, former Secretary of the California Department of Health and Human Services and a former Chief of Staff to Gov. Jerry Brown (D), and Dr. Micah Weinberg, President of the Bay Area Council Economic Institute.


With respect to the limited space here in this venue, we are only going to focus on one specific issue, the push in a growing number of states to adopt their own mandate that individuals have health insurance or pay a penalty. The full broadcast of the discussion covering all of the issues noted above can be accessed here.


One of the big challenges for states has been dealing with the fallout of changes made to the Affordable Care Act. While the change of control in the U.S. House of Representatives in January appeared to ensure the health law was safe, previous changes made to the law by Congress are still being felt in a negative way at the state level. One of the most notable is the loss of the so-called individual mandate, the requirement that all people have health coverage or pay a penalty.


To counter that, some states have previously implemented their own statewide individual mandates, including Massachusetts (since 2006), Vermont and New Jersey. Several more, including Hawaii, Rhode Island, Oregon, Maryland, Minnesota and California, are now considering their own mandates.


Dooley believes the ACA is on sounder footing than some critics might think, but she also notes the need for a way to ensure health insurance pools are able to spread risk around.


“The legislative action to remove the individual mandate was serious,” she says. “Risk pooling is the premise of any insurance program, be it fire or auto or home. You have to have the healthy lives as well as those who need to use health care to have a good risk mix. If you let people opt out, it adversely affects everyone in the pool. Everything costs more.”


Whether a large number of states implement their own mandates this year is yet to be determined, but the road forward even in blue states is not wide open.


The challenge, of course, is political.


“From a policy standpoint, it’s critically important,” Dooley says. “But nobody likes to be forced to pay for something they don’t want, so there is a political risk any time you ask for a mandate.”


The mandate was in fact one of the most unpopular aspects of the Affordable Care Act from the law’s beginning. It is also the crux of the most visible current threat to the law’s existence. Last December, citing Congressional removal of the ACA’s individual mandate, a federal judge in Texas ruled the entire law unconstitutional.


Although most legal observers believe Judge Reed O’Connor’s contention that “the Individual Mandate ‘is essential to’ and inseverable from ‘the other provisions’ of the ACA” will be overturned on appeal, it nonetheless continues placing the law in jeopardy. And that creates something some states likely dislike even more than the mandate: uncertainty.


A recent report from the California Legislative Analyst’s Office makes clear that restoring the mandate also will not unto itself solve the uncertainty. The LAO notes that while “the individual mandate may be one of the state’s most effective policy options to increase enrollment in the individual market and reduce the cost of individual market coverage, particularly for households that currently do not receive federal subsidies,” it would do so “at the expense of individuals who would choose to pay the penalty rather than obtain coverage, perhaps because they do not view available coverage options as affordable.”


The LAO report notes such a law would also be “at odds with the goal of raising revenue for insurance subsidies” because as fewer people pay the penalty, less revenue is generated to pay the subsidies offered for plans bought through the health benefits exchanges.


The individual mandate is just one of several hits to the ACA and the exchanges over the years. The Trump administration, for example, cut tens of millions of dollars in 2018 from the budget for advertising the open enrollment period for buying coverage through a state or federal exchange, while also drastically reducing the open enrollment period itself.


The Trump administration has also allowed consumers the option of extended purchases of so-called “skimpy pans,” lower-cost short-term plans that offer significantly less comprehensive coverage than more standard plans. During the Obama administration, such plans were limited to a lifespan of no more than three months, the Trump administration now allows people not only to buy those plans for as long as 12 months, but to renew them twice.


“I am enormously impressed with the lasting ability of the law and of health care exchanges,” the Bay Area Council’s Weinberg says. “They’ve taken a real licking but just keep on ticking. It’s amazing they’ve continued to exist in the midst of all the headwinds they have now faced for almost a decade.”


Even so, he notes one area he believes lawmakers should focus attention.


“In some ways, the concerns around the exchanges distracts from one of the bigger issues, which is the plight of those people that fall outside of the subsidy range,” he says. “Recent statistics from the Kaiser Family Foundation have shown a 40 percent decrease in enrollment in unsubsidized ACA-compliant plans since 2015.”


There are lots of reasons for that, he says, but he adds it is something lawmakers must keep in mind as they work on legislation to bolster the ACA and the exchanges the law relies on.


Even with all of the challenges and setbacks for the law, Weinberg contends its successes far outweigh its losses. Most notable, he says, is in cost controls. While all medical costs have continued to rise, he argues that the degree of increase has slowed considerably in the age of the Affordable Care Act. Furthermore, it has done so while providing more coverage to more people than ever before.


“It is difficult to attribute any one policy intervention, even one as sweeping as the Affordable Care Act, as being responsible for something as large as health costs,” he says. “The health care costs trend since the passage of the ACA is in the 6 to 7 percent annual range, which is still too high, but it is substantially lower than the ranges of health care cost growth that we saw in other periods of U.S. history.”


As noted, the debate over individual mandates is just one of many lawmakers will consider this year. Medicaid has of late dominated legislative activity. According to LexisNexis State Net, as of last Monday just under 800 Medicaid-related bills are currently active in statehouses across the country, more than those dealing with pre-existing conditions (225), drug pricing (200), the ACA (176) and single-payer systems (53) combined.


With divided government not likely to end federal gridlock any time soon, these or any other reforms are likely to come first at the state level. And if, as once noted by former Supreme Court Justice Louis Brandeis, states are truly the laboratories of democracy, maybe that is the way it should be.