Health Care Reform Implementation Update - December 4, 2012
HHS is quickly moving to implement the Affordable Care Act. Rules are out in the past two weeks that charge insurance companies to participate in federal exchanges, prohibit discrimination based on pre-existing conditions, detail essential health benefit requirements, and expand employment-based wellness programs. In addition, in response to Liberty University’s request, the Supreme Court ordered the 4th Circuit to examine the constitutionality of ACA’s employer requirements.
AT THE AGENCIES
On Friday (11/30), HHS issued new rules that charge insurance companies monthly fees to sell plans through federally run insurance exchanges. These fees will be pegged to the number of customers each insurer has in the exchange.
On Tuesday (11/20), HHS released three proposed rules implementing the Affordable Care Act. Comments may be submitted during the 90-day comment period. One of the rules details ACA’s guaranteed issue and community rating requirements. The rule would prohibit health insurance companies from discriminating against individuals because of pre-existing or chronic conditions, gender or occupation starting in 2014. Under the rule, the only factors by which insurers can underwrite are family size, geography and whether or not the individual smokes. In addition, insurers may not charge seniors more than three times what they charge young people – currently, insurers in 42 states charge seniors five or more times what they charge young adults.
Another of the proposed rules outlines coverage of essential health benefits, which are the minimum package of benefits the Affordable Care Act says must be included in health insurance plans. The categories of benefits that must be included are inpatient and outpatient care, emergency services, maternity and childhood care, prescription drugs, preventive screenings and lab work, mental health and substance abuse treatment, rehabilitation for physical and cognitive disorders, and dental and vision care for children. Much of this information was already known. One surprise, however, is that health insurance plans will have to cover the same number of prescription drugs as the benchmark plan in their states, which means there will be a greater number of prescription drugs covered in each class of drugs.
Finally, HHS also released a proposed rule that implements and expands employment-based wellness programs to promote health and help control health care spending. Under the regulation, employers may reward employees for annual exams or regular workouts, but they may not punish people who do not engage in these activities.
IN THE STATES
According to a report released Monday (11/26) by the Kaiser Family Foundation, states that expand their Medicaid rolls would see only modest cost increases compared with the expense to the federal government. Part of the states' concern over costs, however, is that the federal government could increase the percentage of the bill states have to cover in later years in response to fiscal woes. The report also says that states would face increased Medicaid costs even if they do not expand their Medicaid programs.
On Friday (11/16), Georgia Gov. Nathan Deal said Georgia would not build a state exchange because it has "no interest in spending … tax dollars on an exchange that is state-based in name only."
Wisconsin Gov. Scott Walker, Texas Gov. Rick Perry, Maine Gov. Paul LePage and Arizona Gov. Jan Brewer also each sent letters to HHS Sec. Sebelius saying that their states would not set up state-based insurance exchanges. This means the federal government will set up the exchanges in these states. Gov. Perry also said he will not expand Medicaid.
On Friday (11/16), Michigan Gov. Rick Snyder announced he is planning to move forward with a partnership exchange, however, he has not foreclosed the option of a state-based exchange if the federal deadline is again moved or the state House votes for the bill.
Oklahoma Gov. Mary Fallin announced that Oklahoma would not pursue the creation of a state-based exchange or expand its Medicaid program.
On Monday (11/19), Pennsylvania Gov. Tom Corbett said that expanding Medicaid pursuant to the Affordable Care Act would cost the state millions of dollars that it does not have. The state has not officially made its decision yet, though. The state is particularly concerned about the “woodwork effect” – even though the federal government will cover the costs associated with newly eligible beneficiaries, many new beneficiaries will also “come out of the woodwork” who were previously eligible. These individuals would have to be paid for by Pennsylvania since the federal assistance is only for individuals who are newly eligible. This concern is by no means unique to Pennsylvania.
On Thursday (11/29), Missouri Gov. Jay Nixon said that he plans to expand Medicaid in the state.
IN THE COURTS
On Monday (11/26), the Supreme Court ordered the 4th Circuit Court of Appeals to examine the constitutionality of the Affordable Care Act’s employer requirements and mandatory coverage of contraceptives without a co-pay. This was in response to Liberty University’s request that the Supreme Court reopen arguments against the employer mandate and contraceptive coverage mandate.
On Monday (11/19), a federal judge ruled against Oklahoma City-based Hobby Lobby in its attempt to block enforcement of contraceptive health insurance provisions of the Affordable care Act. Hobby Lobby’s attorneys said they plan to appeal the ruling to a federal appeals court in Denver.
