|The following report is written by Joel Kopperud, The Council’s director of government relations, in concert with our government affairs team and legal counsel at Steptoe & Johnson.
HHS offered states even more time yesterday to determine whether or not to build a state exchange or to rely on the federal government for its implementation. States now have until Dec. 15, 2012 to alert HHS of their intentions, and to submit their exchange blueprints. The original deadline was today. The move is a remarkable delay that’s indicative of the federal government’s hesitance to build a robust federal exchange, and of a likely flood of regulations and guidance to come from HHS around the corner.
Just last week, Secretary Sebelius announced the first delay of deadlines for states to hand over their exchange blue prints, saying that states only had to alert HHS of their intentions on the state exchange by today, and that the actual blue prints for those exchanges would not be due until Dec. 15, 2012. She also noted then that states had until Feb. 15, 2013, to indicate their intentions of building a state/federal partnership exchange.
But yesterday, several Republican Governors, meeting this week in Las Vegas, told the Secretary that it was difficult to make these decisions when the Department is withholding critical guidance and regulations that could be a determining factor in their decision. These regulations include essential benefits design, state benchmark requirements and the list of missing rules impacting employers on issues like auto-enrollment and IRS reporting requirements. Today’s delay was in direct response to the govenors.
Where States Stand Now
Several states made their decisions this week despite the Governors’ successful push for more time. Mississippi, Tennessee and North Carolina indicated that they will move forward with building a state exchange. But states that want a federal exchange now include Alabama, Indiana, Iowa, Kansas, Louisiana, Missouri, Montana, Nebraska, Ohio, South Carolina, Texas, Virginia, Wisconsin and Wyoming. View the full list of state activity. Also, view a map of where states currently stand. Some governors might also be calculating that it’s nearly impossible to establish the exchange successfully in such a short time frame, and better to let the feds take the political fallout for a potentially painful transition process in 2014. States opting for a federal exchange will be bound to the decision for at least one year before they’re able to reinsert themselves in the exchange oversight. Regardless, the growing role of the federal government is exactly what HHS wanted to avoid. The Department is now in the planning stages for the federal exchange and The Council is meeting with regulators to discuss the role of brokers (we’re hopeful that the Department will be as friendly with these requirements as they were in allowing broker involvement on the state exchanges for individuals and small groups).
HHS’s response to the Governors also signals a possible flood of guidance in the next few weeks. The presidential election was the final hurdle to ACA implementation, and it’s largely understood that major regulations have already been written at the Department but their release was delayed to avoid any political ramifications. Now that the election is behind us, and the Secretary bowed to the Governors’ request for more time and information, we can expect the spigot of ACA regulations to turned on high over the next month.
Meanwhile on Capitol Hill
Nearly 90 new Members of Congress came to Washington this week to join their new colleagues in planning for the 113th Congress. Loud rhetoric to repeal the Affordable Care Act is probably a thing of the past, though there will be significant efforts to reform the law and ratchet back its overreach. The initial hit facing the ACA will be how members of Congress and the President address the fiscal cliff. It’s hard to imagine that a grand bargain that requires major tax reform and steers $4 trillion of government spending doesn’t touch federal insurance subsidies earmarked for families making over $90,000 a year. Even Joel Ario, former HHS staff that managed the exchange implementation, conceded that the subsidies are at risk. But he noted that if they’re cut significantly, the entire experiment could fall apart as low-income individuals could be encouraged to pay the penalty resulting in spiked premiums for everybody else.
However that works itself out, Congress also needs to address the Medicaid doughnut hole and it’s (possibly unconstitutional) preference of Non-U.S. citizens. Here, by virtue of the Supreme Court’s decision in the healthcare law, states can avoid the ACA-required expansion of their Medicaid programs to 133 percent of the federal poverty level – the point at which federal subsidies kick in. Several states have already indicated their refusal to expand Medicaid, resulting in millions of lower-income Americans that are now ineligible for Medicaid or for insurance subsidies. But to add insult to injury, legal residents who are not citizens ARE eligible for exchange subsidies. The law notes that since non-U.S. citizens are ineligible for Medicaid, they are now eligible for federal insurance subsidies, down to zero percent of the poverty level.
This is all to say that the Affordable Care Act continues to face a hectic and defining road ahead. The next few months should shine some bright lights on what we can expect from the exchanges and the Department on broker engagement. But the threat facing the broader employer-provided benefits marketplace is becoming more real every day. We continue to fight for preservation of the market and for your business, and we appreciate your support. As always, stay tuned. Visit our Health Care Reform Information Center for the latest news, and contact Joel Kopperud at email@example.com or 703.662.4311 with any questions.
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