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Medicare Compliance & Reimbursement

LEGISLATION:

States Move On Implementing Health Reform Laws

Published on Sun Jan 13, 2008

Major state coverage expansions depend on federal financing, study states

A recent study examining health reform laws in different states shows that 39 states have enacted reforms in at least one access category since 2006, and 13 have started working towards comprehensive reforms to cover at least 50 percent of their uninsured residents, according to an article published in Health Affairs.

Among states that enacted reforms or comprehensive reform initiatives, the most common reforms were:

Children's coverage expansions. The study revealed that there are 26 states that have put into place new coverage expansions for children. Children's coverage expansions cost states less because of the lower average costs of providing insurance for children and higher federal reimbursements available to states through SCHIP.

Adult coverage expansions. The study also found that 18 states have laws for expansion of programs targeting uninsured adults. This comprises states that increased the income eligibility standard for uninsured adults, parents or pregnant women. Some states expanded eligibility within their existing high-risk pools to provide coverage options for people who are uninsurable in the private market because of pre-existing conditions.

Insurance market reform. Fifteen states have put into place insurance market reforms to improve the functioning of these markets and to expand access to private health insurance coverage, according to the study. The reforms cover a range of changes, including extending the age children may remain on their parents' health policies. These reforms also aim at improving access to insurance coverage.

Individual and employer mandates. Only three states have enacted individual or employer mandates. An employer mandate provides a convenient way to cover large numbers of the uninsured, while at the same time minimizing the cost to state government. If employees value the benefit, mandated benefits can be more efficient than direct subsidies, since the latter have deadweight losses from taxation; if employees fully value the benefit, wages would fall to offset the cost to the employer.

Comprehensive reform. Fifteen states have either enacted comprehensive health reforms or are seriously seeking to legislate such reforms. Most comprehensive reforms include elements from all categories identified in this survey, including expansions for children and working adults, insurance market reforms and mandates of various kinds.

Current expansions do not advance coverage levels beyond those in existence prior to cutbacks, according to the study.

The study also identified six specific reform areas:

1. Individual mandates. Individual mandates have caught the attention of other states and presidential candidates.

2. New employer responsibilities. Massachusetts and Vermont have implemented annual assessments on employers that do not provide health insurance to their workers. Massachusetts also initiated the Section 125 cafeteria plans available to uncovered workers who are ineligible for employer plans.

3. Insurance connectors/exchanges. Massachusetts and Washington created a new quasi-governmental unit to connect individuals and small employers in a more efficient health insurance environment.

4. Small-group and individual market merger. This is a graduate-level insurance market reform that will only function in states that have already reorganized both their small-employer and individual insurance markets. Most states have introduced reforms such as guaranteed issue and renewal, removal of medical underwriting and modified community rating in the former and not the latter market.

5. Employers buy into state coverage pools. To create a major source of employer-based coverage, New York will soon allow any employer of any size to purchase coverage through its Family Health Plus program at full cost.

6. Uniting coverage expansions with quality and cost initiatives. Some state officials are relating new coverage expansions to quality and cost control initiatives. States are looking to expand access, control rising costs and implement quality improvement initiatives at the same time.

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