White House to states: Time to get on board with healthcare reform

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.

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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.”