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States Move to Implement Health Care Reform as Fight Continues in Courthouses, Congress

In courthouses and on Capitol Hill, the battle over health care reform is still being fought. Behind the scenes, though, in states all over the country, officials are quietly moving ahead to implement some parts of the law.

Last week, a federal judge ruled a key provision of the law unconstitutional, setting up a legal fight that will almost certainly land in the Supreme Court in the next couple of years.

And congressional Republicans, emboldened by their new majority in the House, are planning a vote to repeal the law as soon as the new session of Congress begins. That will be a symbolic act — there aren’t enough votes for repeal in the Senate, and even if there were, President Obama would veto a repeal bill.

But the incoming chairmen of three key House committees have all indicated they will try to slow down the law by holding hearings and summoning Obama administration officials to the Hill to testify. And they have also signaled they will try to shut off the federal government’s money spigot by refusing to fund some portions of the law.

Much of the work of implementing reform, though, will take place in the states. And Brian Quinn, Director for Health Policy Analysis at the Robert Wood Johnson Foundation, says that on the state level, implementation of the reform law is moving forward.

“Despite the rhetoric, we see a lot of activity across the country,” he says.

Forty-eight states have applied for and received $1 million grants from the federal Department of Health and Human Services to begin planning health insurance exchanges — the state-based marketplaces where consumers will be able to shop for insurance beginning in 2014. Only Alaska and Minnesota have turned down the money, and Minnesota governor-elect Mark Dayton has said he will pursue the grant when he takes office.

Quinn says that most of the 48 states that have accepted federal money to plan for exchanges have set up work groups or task forces, and that almost all of them have websites.

The health reform law gives states wide latitude on how to set up the exchanges. The two states that had set up exchanges prior to the law use very different models. Utah’s model is a wide-open market-driven exchange where a large number of health insurance companies offer a broad set of plans for consumers to choose from. Massachusetts, which passed its own version of health care reform a few years ago, has an exchange with a limited number of companies offering plans that meet a minimum set of benefit requirements.

Bill Hazel, Virginia’s Secretary of Health and Human Resources, says he expects that state’s exchange “would look more like Utah than Massachusetts.”

Virginia is the state that brought the lawsuit in which, last week, U.S. District Judge Henry Hudson ruled unconstitutional the “individual mandate” that will require nearly all Americans to purchase insurance.

But even Virginia is moving ahead in planning implementation.

Hazel leads an advisory panel that last week recommended that the state “articulate a vision for excellence in health, health care and economic strength” that “includes service delivery and payment models.”

In other words, Virginia — like other Republican-led states — is looking for ways to implement the parts of the health care reform law it likes — while continuing to fight the individual mandate in court.

Hazel says he is especially worried about the part of the law that will put millions of people into Medicaid, the federal and state program that provides health care to low-income Americans. He says that Medicaid is already overburdened.

“The idea that we can build a structure of health care on such a shaky foundation is difficult,” he says.

The health reform law will expand Medicaid eligibility to about 16 million Americans who currently do not have health insurance. And while the federal government will pick up the cost of that expansion for a few years, after 2017 states will be expected to pay for much of it.

Hazel thinks that’s unrealistic. “We believe the cost issues have not been dealt with adequately,” he says.

Hazel is not alone in his concern. Almost every state in the country is staring down a huge budget deficit and much of that is driven by Medicaid. In some states where Republican governors and legislatures were elected last month, incoming officials are talking about making cuts to the program or even dropping out entirely.

This week, the PBS NewsHour will examine how states are grappling with the beginning of implementing health care reform amid uncertainty and strained budgets.

Tonight, we’ll hear from Virginia Attorney General Ken Cuccinelli and Nancy-Ann DeParle, director of the White House Office of Health Reform, about the recent court ruling declaring the individual mandate unconstitutional.

Later this week I’ll report from Wisconsin, which has just gone from bright blue to blazing red. Wisconsin recently expanded its Medicaid program, Badger Care, which now covers nearly one out of every five residents. The newly elected Republican governor, Scott Walker, and newly-elected Republican legislature talking about making major cuts.

Meanwhile, Spencer Michels will report from California, where a Republican governor and Democratic legislature recently passed the first post-reform state legislation outlining how a state will set up its exchange.

Stay tuned.

*Find more coverage on health care policy on our Rx for Reform page*.

With reporting by Lea Winerman.

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