By J. LESTER FEDER | 6/14/12
Some conservative experts see reason to hope the states that have been fighting the health care reform law could become hotbeds of health policymaking if the Affordable Care Act fails. They say the work many red states have been quietly doing to comply with the law in case they lose in the Supreme Court could be repurposed to create state-based reforms on a more conservative model. Some states, for instance, may look at their own version of Utah’s small-business insurance exchange.
These alternative approaches are unlikely to address a key goal of President Barack Obama’s health care reform law — expanding coverage to millions of uninsured people — in part because without the federal law, they wouldn’t have the federal cash for subsidies. But lawmakers in conservative states still see an opportunity to address some problems and lay down a marker for eventual broader reforms requiring federal action.
“States will have invested significant time and resources … in the way of their own state brain trust,” said Leavitt Partners’ Cheryl Smith, who has been advising several Republican-led states on health insurance exchanges. “I think what we’ll see is this unleashing of creative juices within states to solve problems.” The health care law has created a focus that even its opponents say may create openings for conservative states to “reclaim” the concept of exchanges as a vehicle for moving away from the employer-based insurance system, said Ed Haislmaier of The Heritage Foundation.“Of particular concern to me [is] that folks on the right not throw out the baby with the bath water,” Haislmaier said Wednesday.
One state that is prepared to head in this direction is Mississippi. The state joined the lawsuit seeking to have the law struck down, but it took a $20 million planning grant, and that work won’t go to waste, said Mississippi Insurance Commissioner Mike Chaney. “Our game plan was to take all the federal money we could take [and] build the exchange,” Chaney said. “If PPACA is ruled unconstitutional in part or in whole, we’re still prepared to go forward with the exchange.”
But an exchange would look very different in a world without the health reform law’s consumer protections and requirements for health plans. Chaney said Mississippi would not set standard benefit packages, require insurers to sell to people with pre-existing conditions or subsidize people buying coverage. This would limit its value to those who currently are uninsured, of course, and could have limited participation like the lightly regulated exchange in Utah.
But its goal, Chaney said, wouldn’t be to help the people who currently have the greatest difficulty buying insurance. It primarily would aim to “make shopping easier for people who can afford [coverage] and don’t have health problems.” He said he hoped it also would create a market for some bare-bone plans affordable to those on the edge of being able to buy plans today. But progressive health care experts say that streamlined exchange model just wouldn’t do much. Bob Crittenden of the Herndon Alliance dismissed it as having “very little value.”
Haislmaier disagrees. The value, he said, is that these market-oriented exchanges would point toward a fundamental change in how health care works. That, in turn, would require the federal government to change policies such as the tax break for employer-sponsored insurance.
Exchanges are best used as a vehicle for allowing employees to shop around for insurance using fixed contributions from employers, Haislmaier argued, citing Utah as a model. This embodies a key tenet of conservative health reform ideas — making individuals more responsible for buying insurance and using competition to drive down costs.
State reforms will likely be most useful as “positioning” for future federal debates on health care reform, said the Kaiser Family Foundation’s Larry Levitt. That may prove true for any reforms more liberal pro-ACA states try as well.
If the Supreme Court takes away the insurance subsidies along with the mandate, it’s hard to see how any state could find the resources to significantly expand coverage. “I think it would be an opening for, frankly, both sides,” Levitt said. “Single-payer advocates will be pushing their agenda as well, but it would be an opening for conservative governors to stake out their point of view.”
Though few states are publicly discussing plans as concrete as Mississippi’s, Iowa Gov. Terry Branstad told The Des Moines Register this week that he’s been working with insurance and hospital industry leaders to come up with an alternative health reform plan in his state. “We’ve had kind of a working group that’s been looking at this for a long time,” Branstad said, adding, “We’re going to see this court decision come down, and then we’re going to have to determine where we go from there.”