Speaking of States

Enrique Martinez-Vidal, Director of the State Coverage Initiatives program, discusses the role of states in building and implementing health insurance exchanges:

I think we can all agree that watching the federal health reform efforts over the past couple of months has left us feeling like we are on a rollercoaster ride. Given our continued work with state officials, we know that despite the drama here in Washington, DC, the states must continue to focus on health care issues despite the historic recession that has caused dramatic deficits in almost every state. Over the past decade, we’ve documented the efforts of states to expand coverage to the uninsured, to reorganize and improve their insurance markets, and more recently, to undertake efforts to increase value in the health care system by redesigning the delivery system and exploring alternative payment incentives. Even this past year, despite fiscal constraints and uncertainty about potential federal reforms, a number of states made substantial strides in implementing reforms.

States have a wealth of experience with health reform efforts and, among the many lessons we’ve learned along the way, perhaps one of the most important is that the success of any reform is dependent on how well it is actually implemented.  As critical as good policy is to the inherent success of a reform, so too are the operational components. That’s where the reform rubber meets the road.

A perfect example and most relevant to us theses days is the concept of establishing state exchanges. We know that President Obama’s most recent proposal follows the Senate’s framework to have states play an important role in creating and overseeing health insurance exchanges. Moreover, whether or not federal reform occurs, we believe that states will be at the forefront of establishing exchanges. Some states are contemplating creating or already working towards implementing their own exchanges as a way to improve the functionality of the individual and small group markets. Likewise, individuals and employers are yearning for more comparative information about their insurance policy benefits and costs. While we already have the experience of Massachusetts’ and Utah’s initial work to look to, they took very different approaches. With more state experimentation in this arena, there will be various iterations along the policy continuum.

Because there still remain many questions regarding how to build an effective and sustainable exchange, we have begun the process of building an inventory of resources to support state work in this area. In late January, we hosted a meeting for state policymakers in partnership with officials from Massachusetts’ Commonwealth Health Insurance Connector Authority to learn from their experience thus far. Most recently, we released an issue brief Preparing for Health Reform: The Role of the Health Insurance Exchange, that raises many important issues that states must evaluate and consider before establishing an exchange. An exchange can do a lot – organize the insurance market, provide a central source of information, enable comparability of benefit designs, administer public subsidies, facilitate the purchase of insurance through standardized enrollment processes, and improve competition among carriers. And, at its very core, an exchange can seek to alter competition in the health insurance market from one based on avoiding risk to one based on price and quality. That is, if you build it correctly.

States policymakers need to develop a thorough understanding of both their uninsured and insured populations, the existing sources of public and private coverage, and the current structure of the commercial insurance market in their state. The roles and responsibilities of an exchange must be defined to determine the appropriate administrative and governance structure it should have. States may need to determine how premium subsidies (if there are subsidies) will be targeted and processed, how to be strategic with effective outreach and enrollment, as well as how to mitigate the potential for adverse selection where one participating carrier ends up with a disproportionate share of high-cost enrollees. In the final analysis, it is critical for a state to clearly understand the goals it is trying to achieve as it takes on the restructuring of its insurance markets.

So, if states build exchanges, will the people come?  While this question may only be answered over time, we believe that, for states, much will depend on assuring they are well-prepared by having laid the necessary groundwork for the development and implementation of these mechanisms that hold the promise of improving insurance markets.
 

The State Health Research and Policy Interest Group held its annual breakfast meeting at AcademyHealth’s National Health Policy Conference on February 9, 2010. The meeting focused on understanding the role states and the federal government play in enrolling new populations in coverage programs. The meeting’s speakers discussed the federal government’s efforts to enroll children in coverage programs under the Children’s Health Insurance Plan, Wisconsin’s efforts at enrollment expansion to ensure its residents universal access to health insurance, and an analysis of the effectiveness of expansion strategies to enroll low income adults in state coverage programs. Presentations from each of the meeting’s speakers can be found here. A detailed summary of the meeting is forthcoming.

The State Coverage Initiatives (SCI) released this year’s State of the States, “The State We’re In,” with the headline, “State Reforms a Bright Spot in 2009.” This may have been a surprising tag following a year of historic state budget deficits. The depth of the angst over the huge budget gaps at the state level last year cannot be overstated. Nevertheless, State of the States was able to point to several bright spots: significant expansion of public programs in states like Oregon, Colorado and Wisconsin; eligibility or outreach improvements in the Children’s Health Insurance Program (CHIP) in 23 states; and insurance market and delivery system reforms across multiple states.

Two major federal reforms were critical to states in 2009: the reauthorization of CHIP and the increase in the Federal Medical Assistance Percentages (FMAP) included in the Recovery Act. These reforms led to a 7.9 percent increase in federal spending in Medicaid, which enabled states to maintain eligibility for key programs despite a 6.3 percent decrease in state spending in state fiscal year 2009. The latest census data show the importance of this strategy: uninsurance rates held basically steady despite falling employer coverage because of an increase in public coverage rates.

The picture is certainly not entirely rosy in the area of Medicaid and CHIP. In state FY 2009, 33 states cut or froze provider payment rates; this increased to 39 states in state FY 2010. Twenty-nine states reported that the FMAP increase helped them avoid or restore eligibility cuts (maintenance of effort in the area of eligibility was required to receive the higher funding amount). The FMAP increase is scheduled to expire in middle of state FY 2010 (although the President’s new budget proposal extends it another six months).

These sobering statistics highlight the important role of federal assistance to states in 2009. The need for an ongoing, effective partnership is clear. As states attempt to move forward, they are looking to the federal government for leadership and needed financial support as they seek to cover more of the uninsured. As you will see in the State of the States report, they are also focusing on insurance market and delivery system reforms in an effort to increase quality and lower costs in the current system. Those tasks also require effective cooperation across all levels of government and with those in the private sector.    

The Massachusetts Health Connector Authority issued a press release today announcing a meeting they are hosting next week with State Coverage Initiatives (SCI). The meeting will highlight the innovations of the Connector, discuss its successes and failures, and guide state officials who are considering similar exchanges or connectors in their own states.

• The commitment to innovation throughout the Connector staff—they are dedicated to learning as they go, applying those lessons and continually improving the organization.
• The transparency and openness of the Connector Authority, particularly through their Board. The Massachusetts reform initiative has maintained high public support throughout its three years plus of implementation. This is no small feat. It is due in part to the openness with which they have made decisions.
• The Connector Authority has worked well with stakeholders. Their decisions are informed by extensive conversations with small businesses and others who would utilize their products. They acknowledge that they are running a consumer-oriented business and conduct themselves accordingly.
   

We look forward to the meeting next week! Watch for more to come from SCI on this topic.

Did you see the  article in this Sunday’s Washington Post, “States Likely to Shape Health Reform?”  It highlights an issue that we fear is not being taken into account enough as Congress gets closer to passing health reform - the critical role that states may play in implementing national health reform.  The article outlines the differences in the House and Senate (Finance Committee) versions of federal health reform as it relates to states.  The House version calls for a national public plan and a national insurance exchange, while the Finance Committee bill maintains and expands the current role of states in regulating the insurance market.  The Finance Committee bill also explicitly allows for experimentation by states, enabling them to try out other coverage models as long as their residents have access to coverage options at least as good as what they would have otherwise.  Now, Senate leadership is publicly considering a public option compromise that allows states to “opt out” of the public plan.

While the Senate Finance version clearly has a stronger role for states, it is clear that states will need to be prepared for many implementation challenges related to federal reform, regardless of which vision for reform comes out on top.  As we outline in this paper, an essential federal-state partnership will provide the foundation for reforming the health system.  States will need to be prepared to be a strong partner.

As states are struggling with budget deficits and staff cuts, implementation of health reform won’t be easy.  That is why SCI (and groups like us) are gearing up to help states understand the legislation (if any) that ultimately passes and to help state officials gain the expertise they need to effectively implement the reforms.  Stay tuned for more information on upcoming meetings, papers and webinars.
 

State Coverage Initiatives (SCI) hosted an all day meeting for state officials earlier this week to discuss the technical and policy issues related to All-Payer Claims Databases (APCDs). We co-hosted the meeting with the National Association of Health Data Organizations (NAHDO). You can find the slides from the meeting here.

As you can see from the figure below, seven states already have state-administered APCDs, and are they being seriously considered in several more. States are using these databases to promote greater transparency in health care prices and quality, as a tool for payment reform, to manage overall health care spending (by both public and private payers), and assess population health. The meeting served as a way for states with existing APCDs to share ideas for funding, governance and use of the information and for new states to benefit from the experience of those who have already resolved many of the technical issues involved in setting up an APCD. Email us as sci@academyhealth.org for more information about setting up an APCD in your state!

• Both spending and enrollment growth outstripped expectations in fiscal year (FY) 2009. Spending increased 7.9 percent compared to 5.8 percent projections and enrollment increased 5.4 percent, the highest rate in six years. Enrollment is expected to increase 6.6 percent in FY 2010.
• The American Recovery and Reinvestment Act prevented major cuts in FY 2009. Fourteen states rescinded eligibility cuts due to the requirement in the bill that states receiving federal funds not reduce eligibility. The funding also prevented or minimized cuts to provider reimbursement and benefits in about two-thirds of states.
• Even in difficult budget times, over half of states are simplifying enrollment and program administration to enable more residents to take advantage of the Medicaid program.
• A handful of states – including Colorado, Maryland, New York, Oklahoma and Wisconsin – are actively increasing their rolls through program expansion.

Unfortunately, analysis in the report points to continued hardships for states in the coming year. With Medicaid spending expected to increase by at least 6.3 percent, there is great concern regarding additional budget shortfalls. And, while states officials have expressed enthusiasm for using the program to expand coverage through federal reform, most are concerned about increasing the financial burden on states. It’s going to be another tough year for states.
 

 
For some good news in the area of children’s health, one need look no further than yesterday’s announcement from HHS Secretary Kathleen Sebelius that $40 million will go to 69 grantees in 41 states and the District of Columbia to help them locate and enroll children who are uninsured but eligible for Medicaid or the Children’s Health Insurance Program (CHIP). Sebelius noted the urgency of this funding given the millions of American families who may have lost access to health coverage due to becoming unemployed.

 After much anticipation, we’re happy to report that Health and Human Services Secretary Sebelius unveiled last Thursday the details of how the $650 million of ARRA funds designated for prevention and wellness activities will be invested. The largest proportion, $373 million, is designated to Communities Putting Prevention to Work, a comprehensive public health initiative led by the Centers for Disease Control that will fund communities across the country to implement high-impact, broad-reaching policy, environmental, and systems changes that aim to increase physical activity, improve nutrition, decrease obesity, and decrease smoking over a two-year time period. SCI is encouraged to learn that the $277 million in remaining funds will be available for states to “support, extend, and evaluate the reach and impact of the community project.”

As we mentioned in Friday’s post, Governor Jim Douglas of Vermont spoke to the National Press Club on Thursday, September 17 about health care reforms in Vermont, his new initiative with the National Governors Association, and the impact of federal health reform on states.

1. Insurance Reform. The Finance Committee bill lays out federal standards but allows states to maintain the majority of oversight in this area, which would enable federal reforms to be blended with current state efforts. Douglas supports the Finance Committee approach and points out that states will need time to phase in proposed changes in this area.
2. Exchanges. Douglas believes it is critical that states manage the exchanges. This would enable states to integrate policies in the exchange with current state initiatives, such as health information exchanges, and to coordinate benefits in the exchange with those in Medicaid, income support programs and food stamps.
3. Medicaid expansion. Douglas asks federal reformers to recognize the precarious financial position of states as they consider state matching rates for new Medicaid populations. He points out that there will be many new Medicaid enrollees who are currently eligible but not enrolled who – he believes –should be considered a part of the expansion population.