ObamaCare power moves to states

One year after ObamaCare’s launch, the healthcare law’s fate largely rests in the hands of the states.

Governors and legislatures will have great power to decide the biggest unsettled issues with the law, including how to control costs, ensure quality care and reach the roughly 40 million people who remain uninsured.

“The states are really where the rubber meets the road on many different levels,” said Sabrina Corlette, a researcher who directs the Georgetown University Center on Health Insurance Reforms.

As the Obama administration proclaims “ObamaCare is working,” the disparate approach to the law by state lawmakers and regulators threatens to leave behind an uneven record of success.

“I don’t think [states] realize how much power they have in determining how the ACA gets enforced in their state,” said Teresa Miller, a healthcare consultant who previously managed state exchanges for the Centers for Medicare and Medicaid Services (CMS).

Most states have embraced the law, though dozens of others, generally with Republican governors or legislatures, have resisted it.

‘Lack of trust’

Twenty states have declined to expand eligibility for Medicaid, which the Obama administration sees as the key to reducing the uninsured population. Additionally, 19 states have not given themselves the power to reject rising insurance rates and five states have refused to enforce ObamaCare entirely.

But there have been signs of a changing tide, particularly when it comes to expanding Medicaid.

HHS chief Sylvia Mathews Burwell helped convince Republican Gov. Tom Corbett of Pennsylvania to expand the program in his state last month, and is also working with red state leaders in Utah and Wyoming.

Governors in both states have feared that a Medicaid expansion will eat away at their dwindling state budgets.

“For the last eight to 10 years, there’s really been a lack of trust on both sides,” said Ray Scheppach, who served as executive director of the National Governor’s Association for nearly 30 years.

“When I worked for governors, I would say it’s the federal government’s fault, but if I’m being realistic, it’s both,” said Scheppach, who now lectures in public policy at the University of Virginia.

Resource gap

About 13 million people are expected to sign up in the healthcare law’s second year, according to the Congressional Budget Office. Advocates for health reform have spent weeks organizing boots-on-the-ground teams to reach pockets of the country where millions of people remain uninsured.

Many of the states with big uninsured populations are also the states hesitant to adopt ObamaCare reforms.

Out of the 15 states with the largest shares of uninsured populations in 2013, only five have obliged with the federal effort to expand Medicaid, according to Census data released this month. Nearly one-fifth of people living in Texas and Florida were uninsured in 2013, though neither decided to expand Medicaid.

Jennifer Sullivan, who oversees the field effort with the nonprofit group Enroll America, said her organization has a bigger role in states where there is less of a government commitment on ObamaCare.

She said in states like Texas, Florida and North Carolina, her staff and volunteers become “the leading voices” on ObamaCare, helping to fill the vacuum left by state leaders.

“There is misinformation out there and a lack of adequate information, that is where our field effort comes in,” said Sullivan, the director of the organization’s Best Practices Institute.

Sticks and carrots

Corlette, the health policy researcher at Georgetown, argues that states have the most crucial role in regulating costs and quality.

“States are much better positioned to be regulator of first resort. Health care is a very local product,” Corlette said. “Feds are a critically important backstop, but in general, I think consumers are better off with a regulator on the ground.”

In many states, however, that compliance is uneven and remains mostly unregulated by the federal government, according to a report this week by the inspector general of the Department of Health and Human Services (HHS).

As a result, the government doesn’t know whether a state’s standards for care – such as the distance a patient travels to see a doctor – are adequate.

Beyond the mechanics of the law, the federal government must also convince states to buy into the larger goal of healthcare reform.

In June, CMS officials sent letters to 10 state leaders warning that they were not doing enough to help people sign up for insurance. But when Tennessee’s top health official responded to that letter, he blamed the issues on the federal government and refused to change course.

Soon after, a group of nonprofit law firms, including the Southern Poverty Law Center (SPLC), filed a lawsuit claiming that the state has illegally prevented needy people from signing up for healthcare.

Sam Brooke, a lawyer arguing the case for the SPLC, said his organization took legal action because there was little that the Centers for Medicaid and Medicare Services (CMS) could do besides take away the state’s much-needed funding.

“CMS can offer as many carrots as they can think of to incentivize states to do the right thing, but the only stick they have is to pull out all the funding, and that’s the last step that anyone wants to have happen,” Brooke said.