90-Day Limit on Eligibility Waiting Period
Original article from United Benefit Advisors
Unlike the shared responsibility penalties (which will apply only to larger employers), the 90-day limit on eligibility waiting periods will apply to virtually all employer health plans - regardless of the employer's size and even if a plan remains "grandfathered" under health care reform. All employers should thus familiarize themselves with the guidance in Notice 2012-59.
Citing regulations issued in 2004, the agencies define a "waiting period" as "the period that must pass before coverage for an employee or dependent who is otherwise eligible to enroll under the terms of a group health plan can become effective." (Emphasis added.) Consistent with the italicized language, the agencies note that nothing in health care reform requires a plan to provide coverage to any particular category of employees. (Of course, as noted earlier, a large employer may incur a shared responsibility penalty if the exclusion of a full-time employee results in that employee receiving subsidized coverage through an Exchange.)
Much of Notice 2012-59 is devoted to explaining when the agencies will view an eligibility condition as being designed to avoid compliance with the 90-day waiting period limitation - and therefore a violation of this requirement. For instance, a plan may validly require that an employee be in an eligible job classification - such as hourly, salaried, or working at a specified location - in order to participate. And any period in an ineligible classification need not be counted against the 90-day limit. On the other hand, any eligibility condition that is based solely on the lapse of time may last no longer than 90 days.
So far, this is all clear enough. But the guidance then goes on to address certain harder cases. For instance, what if a plan conditions an employee's eligibility on working "full-time" (under either the 30-hour-per-week standard or otherwise) and an employee is hired on a variable hour or seasonal basis? Here, Notice 2012-59 refers to the "initial measurement period" concept outlined in Notice 2012-58. As explained above, this concept could allow for a period of up to twelve months (plus a brief administrative period) for a plan to determine whether an employee has satisfied this eligibility condition - even though such a period greatly exceeds 90 days.
What about a different type of eligibility condition, such as one offering coverage to part-time employees only after they have completed a total of 1200 hours of service? An example in Notice 2012-59 specifically approves of this approach, even though the employee in that example was therefore required to work nearly a year before entering the plan. Interestingly, however, the Notice appears to set a 1200-hour limit on such an eligibility condition, noting that the agencies would consider a requirement to complete more than 1200 hours to be designed to avoid compliance with the 90-day waiting period limitation.
Finally, Notice 2012-59 connects the 90-day limit on eligibility waiting periods to the shared responsibility penalties discussed in Notice 2012-58. It does so by noting that a large employer may require even a full-time employee to satisfy a waiting period of up to 90 days without thereby running the risk of incurring a shared responsibility penalty. Moreover, during that waiting period, the employee may qualify for subsidized coverage through an Exchange. In this way, the Notice closes an analytical gap in the statutory language.
What to Do Now
Although neither of the requirements discussed in this article will take effect until January 1, 2014, sponsors of employer health plans will want to begin planning for their implementation well before that date. In fact, any employer planning to use the look-back/stability period safe harbor for identifying full-time employees during 2014 must begin counting hours of service during 2013.
Moreover, the agencies have stated that this interim guidance will remain in effect through at least the end of 2014 - with any more restrictive guidance taking effect no earlier than 2015. Accordingly, employers can be certain that these are the rules that will apply during the first year the requirements are effective.
Summary of Benefits and Coverage and the Uniform Glossary
The Health Care Reform law requires plan sponsors to provide two new government-developed documents to plan participants. The "Summary of Benefits and Coverage" (SBC) and the "Uniform Glossary" are intended to provide high-level descriptions of a plan (and definitions of standard terms) and are in addition to the ERISA requirement to provide a Summary Plan Description (SPD). An SBC need not be provided for plans, policies, or benefits packages that constitute excepted benefits. If a plan sponsor intends to make any material modifications in coverage, such as increases in cost-sharing or benefit reductions, the law requires the sponsor to notify participants at least 60 days before the modifications become effective. Penalties for non-compliance are significant.
The federal agencies published final regulations and template versions of the SBC and Uniform Glossary on February 9, 2012. The final regulations are very similar to the proposed regulations. The templates were developed by the National Association of Insurance commissioners for insurance policies and the final regulations relaxed the requirement about completing the template "as is". If the plan's terms cannot reasonably be described "in a manner consistent with the template and instructions, the plan or issuer must accurately describe the relevant plan terms while using its best efforts to do so in a manner that is still consistent with the instructions and template format as reasonably possible.". Plan sponsors (or their health insurance carriers) must begin distributing the SBC to participants and beneficiaries eligible to enroll in group health coverage through an open enrollment period beginning on the first day of the first open enrollment period that begins on or after September 23, 2012. For participants and beneficiaries who enroll in group health plan coverage other than through an open enrollment period, the requirements begin on the first day of the first plan year that begins on or after September 23, 2012. Distribution is required with enrollment materials, by the first day of coverage if there are changes since the enrollment, upon renewal, and upon request. An SBC may be distributed in paper or electronic form. The Uniform Glossary may also be distributed in paper or electronic form, but distribution is required only upon request. Click here to see a completed SBC template.
Health Care Reform, Costs Likely Will Alter the Nature of Wellness
In the wake of the Supreme Court's ruling on health care reform, the future of employer-sponsored health care insurance remains murky at best.
One health trend, though, looks like it's here to stay as more insurers, employers and workers buy into corporate wellness programs. Yet the makeup of such programs likely will continue to evolve, experts say.
Jane DuBose, a principal director of advisory services for HealthLeaders-InterStudy, said at a recent industry conference that she expects health plans to continue shifting focus to wellness and prevention measures in an attempt to control costs, according to a Business Finance report.
DuBose said health plans increasingly will tie plan design to lifestyle behaviors and will include more incentives, such as cash and gift cards. While many employers have already taken these steps, the impact of the initiatives would be more powerful if health plans take a more active role in the wellness promotion, DuBose said.
Yet some of those moves -- such as linking wellness goals and premiums rates -- might run into strong resistance from employees, a new study suggests.
Most employees (68 percent) don't think participation in wellness programs should be required to qualify for benefits, according to a study by the National Business Group on Heath (NBGH). In an article by Employee Benefit News, NBGH reports that 62 percent of respondents said they oppose the idea of charging workers more for health coverage if they don't join wellness initiatives.
On the other hand, more than 80 percent of workers favor financial incentives as a reward for voluntary participation, the study finds.
Those incentives may prove to be the linchpin of the wellness programs of the future, according to a recent report by Occupational Health and Safety magazine.
The publication recently reported on a paper -- backed by a group of six major health organizations -- that provides tips on how employers can build quality wellness initiatives. The paper touts the power of incentives and predicts that financial and "outcomes-based" rewards will become more common in wellness programs because of the health care reform law. The paper, however, discourages the notion of tying wellness success to health care access.
"Workplace wellness programs can provide the tools and opportunities to improve health and wellness, but they should not be used in ways that undermine an employee's ability to obtain adequate and affordable health insurance coverage," Nancy Brown, CEO of the American Heart Association, stated in the report.
Employers Prep for New Moves under PPACA
As the 2013 enrollment time draws near, employers are preparing to jump through a few extra hoops thanks to the recently reaffirmed health care reform law.
In addition to the usual notices and benefit communications that employers must prepare and distribute to their employees, the Patient Protection and Affordable Care Act has added a summary of benefits and coverage (SBC) to the enrollment pile for plans that begin on or after Sept. 23, 2012.
The SBC is a four-page document that provides information about a plan's health care coverage and out-of-pocket costs for employees, according to a recent online post by law firm Warner Norcross & Judd LLP. Employers with fully insured plans can expect their insurers to provide the bulk of the content for their SBCs. Self-insured companies, on the other hand, will have to craft the SBCs themselves, the law firm notes.
The rules allow for a few actions that can simplify the process for employers, Warner's post notes. For example:
- Separate tiers of coverage can be covered in a single SBC.
- The SBC can be a stand-alone document or it can be included in an enrollment booklet, provided that it isn't buried and hard to find.
- A single SBC can be used for multiple plans, assuming that the only differences are deductibles and copay/coinsurance amounts, and that the document clearly defines these differences between the plans.
- The same distribution rules apply to SBCs as to summary plan descriptions (SPDs) under ERISA.
Employers with calendar-year health flexible spending accounts also will want to inform workers about the new $2,500 annual contribution cap created by PPACA, according to Linda Rowings, compliance director for United Benefit Advisors. Prior to enrollment, companies should double-check to ensure that their FSA administrator is prepared for this change, Rowings added.
Unfortunately for employers, these changes represent only the tip of the iceberg for new PPACA notices and enrollment duties. Once the health care exchanges, "pay or play" penalties and other major provisions of the law come into effect in 2014, employers can expect even more work around enrollment time.
One thing PPACA likely won't change, though: Quality employer-sponsored health benefits, which can strengthen recruiting/retention efforts and improve a workforce's health and productivity, remain highly valued by employees.
That's the result of a new survey that shows employees' satisfaction with their employer-provided benefits either rose or remained stable in 2012 compared with 2009, despite increased cost-sharing. The poll by the National Business Group on Health found that nearly two-thirds of workers are very satisfied with their health coverage through their employer or union, according to aPLANSPONSOR report.
While the increasing compliance hassles and climbing costs may prompt some employers to dump health coverage in the future and send their employees into the health care exchanges, a separate study suggests that move won't save employers money in the short or long term.
The study by Truven Health Analytics, as reported by the Employee Benefits Counsel, found that employers that choose to drop coverage in 2014 and pay penalties under PPACA likely will feel pressure to "make employees whole" by increasing compensation (which lacks the tax shelters of providing health benefits). This, combined with the penalties, will make dropping coverage a losing proposition financially, researchers said.
In light of those facts, most employers likely will be better off suffering through the extra enrollment and compliance work and continuing to provide health benefits, the report suggests.
"Employers must provide market value -- in benefits and compensation -- to retain skilled workers and will not be able to unilaterally cut benefits and expect employees to absorb the projected inefficiency of exchange-based coverage," the Counsel study notes.
Generic Cash
Generic drugs generated nearly $193 billion in savings to the U.S. health care system in 2011, according to a report by the General Pharmaceutical Association. The group noted that the figure likely will increase in coming years because a slew of high-price brand-name drugs, such as Lipitor and Zyprexa, had their patents expire recently.
Health Care Law to Cut Deficit, Says Budget Office
Copyright 2012 ProQuest Information and Learning
All Rights Reserved
Copyright 2012 Morning Sentinel
Morning Sentinel (Waterville, Maine)
BY RICARDO ALONSO-ZALDIVAR AND ANDREW TAYLOR
Associated Press
WASHINGTON -- President Barack Obama's health care overhaul will shrink rather than increase the nation's huge federal deficits over the next decade, Congress' nonpartisan budget scorekeepers said Tuesday, supporting Obama's contention in a major election-year dispute with Republicans.
About 3 million fewer uninsured people will gain health coverage because of last month's Supreme Court ruling granting states more leeway, and that will cut the federal costs by $84 billion, the Congressional Budget Office said in the biggest changes from earlier estimates.
Republicans have insisted that Obamacare will actually raise deficits -- by "trillions," according to presidential candidate Mitt Romney. But that's not so, the budget office said.
The office gave no updated estimate for total deficit reductions from the law, approved by Congress and signed by Obama in 2010. But it did estimate that Republican legislation to repeal the overhaul -- passed recently by the House -- would itself boost the deficit by $109 billion from 2013 to 2022.
"Repealing the (health care law) will lead to an increase in budget deficits over the coming decade, though a smaller one than previously reported," budget office director Douglas Elmendorf said in a letter to House Speaker John Boehner, R-Ohio.
The law's mix of spending cuts and tax increases would more than offset new spending to cover uninsured people, Elmendorf explained.
Tuesday's budget projections were the first since the Supreme Court upheld most of the law last month but gave states the option of rejecting a planned expansion of Medicaid for their low-income residents. As a consequence, the budget office said the law will cover fewer uninsured people.
Thirty million uninsured people will be covered by 2022, or about 3 million fewer than projected this spring before the court ruling, the report said.
As a result, taxpayers will save about $84 billion from 2012 to 2022. That brings the total cost of expanding coverage down to $1.2 trillion, from about $1.3 trillion in the previous estimate.
The Congressional Budget Office has consistently projected that Obama's overhaul will reduce the deficit, although previous estimates aren't strictly comparable with Tuesday's report because of changes in the law and other factors.
At the time it was approved in 2010, CBO estimated the law would reduce the deficit by $143 billion from 2010 to 2019. And CBO estimated that last year's Republican repeal legislation would increase deficits by $210 billion from 2010 to 2021.
That may sound like a lot of money, but it's actually a hair-thin margin at a time when federal deficits are expected to average around $1 trillion a year for the foreseeable future.
When the law is fully in effect, 92 percent of citizens and legal residents are estimated to have coverage, as compared to 81 percent now.
Democrats hailed Tuesday's estimates as vindication for the president. "This confirms what we've been saying all along: theAffordable Care Act saves lots of money," said Senate Majority Leader Harry Reid, D-Nev.
Actually, the government will spend more. It just won't go onto the national credit card because the health care law will be paid for with a combination of spending cuts and tax increases.
GOP leaders sought to shift attention from claims about the deficit and focused instead on the additional spending. "What we know from today's CBO report ... is that the new health care law is dramatically increasing health care spending and costs," said Senate Republican leader Mitch McConnell of Kentucky.
Republicans said they remain unswervingly committed to repealing what they dismiss as Obamacare. When combined with other budget-cutting measures, GOP leaders say that repeal will ultimately reduce deficits. Romney says if elected he will begin to dismantle the law his first day in office.
Medicaid has been one big question hanging over the future of Obama's law since the Supreme Court ruled.
Some GOP-led states, such as Texas and Florida, say they will not go forward with the expansion. Others are uncommitted, awaiting the voters' verdict on Obama in November.
Although the federal government would bear all of the initial cost of that expansion, many states would have to open their Medicaid programs to low-income childless adults for the first time.
CBO analysts did not try to predict which specific states would jump in and which would turn down the Medicaid expansion. Instead, they assumed that many states would eventually cut deals with the federal government to expand their programs to some degree.
As a result, the budget office estimates that more than 80 percent of the low-income uninsured people eligible under the law live in states that partially or fully expand their programs.
The big coverage expansion under the law doesn't start until 2014, with middle-class uninsured people signing up for subsidized private plans and more low-income people picked up through Medicaid.
HEALTH CARE LAW SAVES $3.9 BILLION ON PRESCRIPTION DRUGS FOR PEOPLE WITH MEDICARE IN 2012 ALONE
States News Service
Source: Lexis Nexis
BALTIMORE, MD
The following information was released by the Centers for Medicare & Medicaid Services:
As a result of the Affordable Care Act, over 5.2 million seniors and people with disabilities have saved over $3.9 billion on prescription drugs since the law was enacted. The Centers for Medicare and Medicaid Services (CMS) also released data today showing that in the first half of 2012, over 1 million people with Medicare saved a total of $687 million on prescription drugs in donut hole coverage gap for an average of $629 in savings this year.
Millions of people with Medicare have been paying less for prescription drugs thanks to the health care law, said CMS Acting Administrator Marilyn Tavenner. Seniors and people with disabilities have already saved close to $4 billion. In 2020, the donut hole will be closed thanks to the Affordable Care Act.
These savings are automatically applied to prescription drugs that people with Medicare purchase, after they hit the Medicare Part D prescription drug coverage gap or donut hole. Since the law was enacted, seniors and people with disabilities have had several opportunities to save on prescription drugs:
In 2010, people with Medicare who hit the donut hole received a one-time $250 rebate. These rebates totaled $946 million for 2010;
In 2011, people with Medicare began receiving a 50 percent discount on covered brand name drugs and 7 percent coverage of generic drugs in the donut hole. Last year, these discounts totaled over $2.3 billion in savings;
This year, Medicare coverage for generic drugs in the coverage gap has risen to 14 percent. For the first six months of the year, people with Medicare have saved $687 million.
Coverage for both brand name and generic drugs in the gap will continue to increase over time until 2020, when the coverage gap will be closed.
Employers Lack Confidence in PPACA Understanding
By Rebecca Moore
Source: PLANSPONSOR
Just 40 percent of HR decision makers from large organizations are very confident about their understanding of employer requirements under the Patient Protection and Affordable Care Act (PPACA), according to an ADP Research Institute survey.
Even fewer respondents in small companies (20 percent) and midsized companies (17 percent) expressed that same level of confidence.
Worries Grow as Health Care Companies Send Jobs Overseas
Don Lee, Tribune Washington Bureau
Chattanooga Times Free Press (Tennessee)
WASHINGTON -- After years of shipping data-processing, accounting and other back-office work abroad, some health care companies are starting to shift clinical services and decision-making on medical care overseas, primarily to India and the Philippines.
Some of the jobs being sent abroad include so-called pre-service nursing, where nurses at insurance companies, for example, help assess patient needs and determine treatment methods.
Outsourcing such tasks goes beyond earlier steps by health care companies to farm out reading of X-rays and other diagnostic tests to health professionals overseas. Those previous efforts were often done out of necessity, to meet overnight demands, for instance.
But the latest outsourcing, which has contributed to the loss of hundreds of domestic health jobs, is done for financial reasons. And the outsourcing of nursing functions, in particular, may be the most novel - and possibly the most risky - of the jobs being shifted.
At the forefront of the trend is WellPoint Inc., one of the nation's largest health insurers and owner of Anthem Blue Cross, California's biggest for-profit medical insurer.
In 2010, WellPoint formed a separate business unit, Radiant Services, aimed at advancing outsourcing and other cost-saving strategies. WellPoint has eliminated hundreds of jobs in the U.S. over the last 18 months as it has moved jobs overseas, a company spokeswoman acknowledged.
The spokeswoman, Kristin Binns, said WellPoint's shifting of clinical jobs overseas was a small part of the outsourcing and being done through Radiant because it has the technical expertise and can ensure compliance with laws.
Nursing organizations, however, were cautious.
"It's obviously a very disturbing trend," said Chuck Idelson, a spokesman for the California Nurses Assn. "There are serious questions if you're talking about utilization reviews ... and making recommendations on procedures."
Nursing experts said there also may be licensing issues as states generally require certification for those practicing and dispensing health information.
Current and former Radiant executives declined to comment or weren't available.
It's not clear how many other U.S. health care companies have contracted with Radiant or other outsourcing specialists, but industry experts said companies were increasingly looking at more healthcare tasks that could be outsourced globally as they face greater cost pressures and sweeping changes in how they do business.
Aetna Inc. has an arrangement with EXL Service, a U.S.-based company with operations in Manila, to provide "targeted care-management support," spokeswoman Cynthia Michener said.
Health Net Inc., which is laying off dozens of information technology and accounting workers whose jobs are being sent to India, said its outsourcing has generally been confined to administrative and IT functions. UnitedHealth Group, the nation's largest health insurer, didn't respond to inquiries.
Outsourcing jobs out of the country has become a hot issue in the presidential campaign: President Barack Obama is pounding Republican challenger Mitt Romney for his private equity company's involvement with companies that sent jobs abroad.
Although such outsourcing has been going on for years, American manufacturers in recent years have brought some jobs back to the U.S. as labor costs have risen in China and elsewhere.
Some experts argued that sending jobs abroad could help U.S. companies by enabling them to tap global talent and efficiencies, making them more profitable. When U.S. companies are stronger, the thinking goes, it creates more opportunities for Americanworkers. Also, shifting operations to lower-wage countries can help consumers by holding down prices.
Outsourcing jobs to places such as the Philippines can save U.S. health care companies 30 percent in labor costs, according to experts. But the practice remains controversial, especially with the U.S. unemployment rate hovering above 8 percent.
Patient advocates worry about crucial decisions involving a patient's care being in the hands of foreign insurance adjusters. Analysts said there was another concern as well: patient privacy.
Even something as straightforward as medical transcription can raise questions, said Uwe Reinhardt, a healthcare economist at Princeton University. Over the last year, Iowa Health System and hospitals in Utah and Washington state have joined other medical centers that have outsourced the transcribing of doctors' notes and other records.
"Suppose I'm an AIDS patient," Reinhardt said. "That person in India would know - and (the information) could be valuable to someone.... For the U.S., there's nothing more personal than health care."
Dr. Kaveh Safavi, head of the North American health practice for Accenture, a major consulting and outsourcing company that has partnered with WellPoint's Radiant, said nearly all countries have laws for protecting patient privacy.
And to safeguard patients' records, he said, heath care companies store and maintain their records locally.
As for outsourcing services that are more clinical in nature, he said, "People are looking at all the tasks that can safely and responsibly be moved. It's still an emerging market. We're still trying to understand the market's tolerance for it."
In general, hospitals are moving more slowly than health insurers to send jobs overseas. But with financial pressures intensifying and the uptake of electronic record-keeping accelerating, analysts and industry people see more consolidation and outsourcing ahead.
"When you have people's medical, billing and other records kept electronically, then it opens it up to establishing a call center virtually anywhere," said Steve Trossman, a Los Angeles spokesman for the Service Employees International Union, which represents hospital workers. "There is no longer a reason for it to be physically in the same place as the paper records."
Moreover, the health care reform law could prod insurers to move more jobs to cheaper-wage countries. The new law requires companies to spend 80 percent to 85 percent of premiums on medical care, limiting the amount available for administrative expenses.
Few have been as aggressive as WellPoint, which made a profit of $2.65 billion last year on revenue of $60.7 billion. WellPoint's total employment at the end of last year was 37,700, down from 40,500 two years earlier.
In one of its recent efforts, WellPoint laid off pre-service nurses in Colorado and Nevada so the work could be done in Manila, according to a Labor Department filing by a WellPoint human resource manager in Denver. WellPoint spokeswoman Binns said none of the decisions that involve denial of procedures or treatment for patients is made overseas.
(EDITORS: STORY CAN END HERE)
Overall, Binns said, fewer than 2.5 percent of the 37,000 employees, or at most 925 workers, had lost jobs in the last 18 months as a result of work sent overseas. Only about 50 of those positions involved clinical management of care, she said.
WellPoint's "sourcing strategies have enabled us to make our services more effective, accessible and affordable to our customers, while allowing us to expand our programs and maintain our service levels," she said.
WellPoint's offshoring covers a wide range of departments and tasks involving claims, enrollment, billing, post-service clinical claims review, utilization management and pre-service nursing, according to filings made by company managers and state government officials. Both were helping secure federal trade-assistance benefits for WellPoint workers who have lost jobs because of outsourcing or import competition.
Shannon Cunningham of Columbus, Ohio, who processed medical claims for WellPoint, was laid off last month after a colleague went to the Philippines to train people to do her job.
Cunningham, 43, said she received eight weeks of severance pay. She and others working in medical claims earned $30,000 to $40,000 a year with health benefits, she said.
"I know other countries need work," said Cunningham, a company employee for three years. But "I just felt like it wasn't fair. We're having a rough time too."
White House Tells States to Get On Board with Healthcare Reform
By Sam Baker
Source: thehill.com
The Obama administration is aggressively pushing states to implement the healthcare reform law now that the Supreme Court has upheld it.
In the two weeks since the court issued its decision, the Health and Human Services Department has pushed out new grants, new policies and a new rhetorical standby: It’s time to get onboard.
“The volume of activity has certainly gone up,” said Alan Weil, executive director of the National Academy for State Health Policy.
HHS has been steadfastly implementing the Affordable Care Act since President Obama signed it in 2010, and state outreach has always been part of that effort — the department has awarded hundreds of millions of dollars in implementation grants.
But some Republican governors dug in their heels against implementing at least the biggest pieces of a law they thought the Supreme Court might strike down. With that possibility out of the way, HHS is making another big push to bring states onboard.
"Now that the Supreme Court has issued a decision, we want to work with you to achieve our ultimate shared goal of ensuring that every American has access to affordable, quality healthcare," HHS Secretary Kathleen Sebelius wrote in a letter to governors this past Tuesday.
She has echoed that message several times since the court issued its historic 5-4 decision upholding most of the Affordable Care Act, and Obama sounded a similar theme when the ruling was announced.
The administration has matched it’s “let’s move on” rhetoric with policy.
The day after the Supreme Court announced its decision, HHS unveiled new funding opportunities designed to help states plan for their insurance exchanges. HHS officials said they expected to receive funding requests from states that had previously resisted the idea of an exchange.
“I think there will be some renewed, ‘Let’s at least figure out what this will look like,’” Weil said.
Exchanges are new, centralized marketplaces where individuals and small businesses will buy private insurance. The ACA calls on each state to set up its own exchange and authorizes a federally run fallback in any state that doesn’t act. Exchanges have to be up and running by 2014, so HHS has to certify in 2013 whether each state will be able to build its own.
Some Republican governors who said they were waiting for the Supreme Court are now saying they won’t implement the law until they see how November’s elections shake out and whether Republicans pick up enough seats to try to repeal the law.
“Saying you’re going to wait is, in effect, making a decision,” Weil said. “If the calendar has made up your mind, then you have made up your mind.”
Although some red-state delays are pure politics, Weil said many states were legitimately leery of stepping up to such a massive undertaking when there seemed to be a good chance the Supreme Court would render all of that effort moot.
Waiting for the court “wasn’t a crazy thing to do,” he said. He expects some of those states to apply for new grant money and look more seriously at what a state-run exchange would entail.
“Gambling on the outcome of an election is a real gamble,” he said. “And so I think there are a lot of states that are realizing that with only one hurdle left, there’s a very real chance this law is going to be around. They are renewing their efforts to figure out what it means for them.”
HHS is trying to make that process easy. Federal officials made it abundantly clear at the outset that they want each state to set up its own exchange, which most policy experts agree would be better than a federal exchange.
The department said last year, in its first proposed rules on exchanges, that it would certify state-based exchanges after 2014, in case states weren’t ready on time but could get there eventually.
Weil was surprised by that policy at the time. But it’s consistent, he said, with HHS’s announcement after the Supreme Court ruling that states could receive exchange planning grants through the end of 2014. Many observers assumed planning grants would be cut off at the beginning of the year.
HHS also made a point last week to explicitly remind states that planning grants are for planning — states don’t have to set up an exchange just because they took federal planning money, and they don’t have to pay the money back if they ultimately decide to let the federal government handle their exchanges.
“We expect that, as states study their options, they will recognize that this is a good deal,” Medicare Administrator Marilyn Tavenner said in a letter to Republican governors.
While the Supreme Court cleared away one major area of uncertainty, it also raised a new question for states to answer: Do they want to participate in the healthcare law’s Medicaid expansion?
As written, states would have had to participate or give up all of their federal Medicaid funding. But the Supreme Court said that setup was unconstitutional and states must have the right to opt out of the expansion while keeping the rest of their programs intact.
The quickest decisions came from Republican governors with an eye for the national stage, including Texas’s Rick Perry and Louisiana’s Bobby Jindal, who lumped Medicaid and the exchanges together and said they wouldn’t do anything to implement “ObamaCare.”
The practical considerations between the two programs, though, are very different. (For example, there is no federal fallback for states that don’t accept the Medicaid expansion.) And though states had time to at least think about exchanges while they waited for the Supreme Court, the Medicaid decision is altogether new.
“On exchanges, states have been thinking about it and following this whole discussion. (Medicaid) was like dropped out of the sky,” Weil said. “No one has spent the last year thinking about whether or not they wanted to do the Medicaid expansion.”