Nearly a year into health law, states are all over the map

McClatchy NewspapersFebruary 8, 2011 

WASHINGTON — States are taking different paths to implementing the nation's new health care law, as some roar ahead while others proceed grudgingly, hoping that the courts or Congress will overturn or dilute the statute.

States feel two kinds of pressure, fiscal and political.

"States are of two minds. They want the money (Washington is providing to help with the transition), especially now because of the financial pressure they're facing. But they also resent the strings attached to the money," said Jameson Taylor, director of research at the South Carolina Policy Council, a libertarian research group based in Columbia, S.C.

Experts are unsure what the patchwork of different state approaches could mean to consumers once key parts of the law take effect in 2014. Nearly everyone has to have health coverage that year or face penalties.

"It's a challenge," said Joy Wilson, the director of health policy at the National Conference of State Legislatures, speaking about the fiscal outlook. As for the political climate, she said, "It's too early to predict."

Some states are acting now. California has created an insurance "exchange," or marketplace, where consumers can comparison-shop for coverage starting in 2014.

California is moving quickly for two reasons. Former GOP Gov. Arnold Schwarzenegger, who left office in January, was "very personally committed" to improving health care, said Diana Dooley, the state secretary of health and human services.

In addition, because the state was moving ahead on making changes, "there's a better understanding in California of the components," said Dooley, appointed to the Cabinet by current Gov. Jerry Brown, a Democrat.

South Carolina, on the other hand, hasn't passed an exchange law, and new Republican Gov. Nikki Haley has called the health care law an "unconstitutional infringement." She's not inclined to implement its mandates.

Each exchange is a crucial piece of a state's role. Another key state responsibility is managing expansion of the Medicaid program, the joint state-federal health care program for lower-income people.

The political dynamic is playing out in the courts, Congress and state legislatures. Challenges to the law's constitutionality filed by 27 states are working their way through the federal court system, and so far four federal judges have ruled on the law, two for and two against.

The House of Representatives passed repeal legislation last month, but it died last week in the Democratic-majority Senate. Lawmakers are now trying to make piecemeal changes; Sens. Lindsey Graham, R-S.C., and John Barrasso, R-Wyo., are pushing a plan that would allow states to opt out of the law.

They speak for lots of Americans.

Arizona voters in November approved, by a 55 percent majority, a state constitutional amendment saying that no one can be compelled to "participate in any health care system."

"The idea of forcing individuals to get government-prescribed health insurance, not for our own good but for the sake of subsidizing others, is not right," said Clint Bolick, the litigation director at the Goldwater Institute, a Phoenix-based conservative research group.

Supporters of the Arizona effort offer several alternatives, including government help for people to create health savings accounts or incentives to states to create high-risk pools for those who have difficulty getting insurance.

In Wisconsin, Republican Attorney General J. B. Van Hollen said that after the latest federal district court ruling — in Florida, that the law is unconstitutional — the law is dead unless it's revived by an appellate court.

"Effectively, Wisconsin was relieved of any obligations or duties that were created under terms of the federal health care law," he said. The state is expected to review how to proceed; the future of implementation there is unclear.

Yet other states are acting. Despite all the angry talk, "states are continuing to move forward with implementation," said Maria Ibanez, the communications director at the National Academy for State Health Care Policy, an independent research group.

Still, even those states face severe fiscal challenges. Most states are under enormous pressure to cut spending and find new sources of revenue. Every state but Vermont has to balance its budget each year.

"Fiscal 2009 and fiscal 2010 represented two of the most difficult

years for state fiscal conditions since the Great Depression," said the National Governors Association's fall report called "Fiscal Survey of the States."

This year, it said, "states still face very tight fiscal conditions and will be forced to make numerous difficult spending decisions."

For the fiscal year that starts on July 1, 44 states and the District of Columbia project budget shortfalls totaling $125 billion, according to the Center for Budget and Policy Priorities, a nonpartisan organization.

There's no easy way to ascertain the new law's costs. "The scope (of the law) is so broad that it will be years before all of its provisions will be fully implemented, and its overall ramifications fully understood," warned a report last year from the nonpartisan California Legislative Analyst's Office.

Washington is helping. It's already given states millions under the law. Arizona, for instance, has received $22.2 million in new grant money. Wisconsin has received $37.8 million and South Carolina, $15.6 million.

While under the law more people will qualify for Medicaid, the federal government will cover costs of the newly eligible through 2016.

But then the states bear the expanded Medicaid burden, and some of them aren't happy about it.

"In Indiana, our independent actuaries have pegged the price to state taxpayers at $2.6 billion to $3 billion over the next 10 years. This is a huge burden for our state," wrote Indiana Gov. Mitch Daniels in Monday's Wall Street Journal. Daniels, a former George W. Bush administration budget chief, is weighing a bid for the Republican presidential nomination in 2012.

The exchanges pose a more immediate fiscal problem. It's unclear what benefits will be mandated; the federal government expects to decide that later this year.

That timetable means states could have trouble figuring out the cost of the exchanges. They'll get federal money to run them for one year, until 2015, but after that, the exchanges must be self-supporting, meaning states will either have to spend more money or come up with revenue-raisers.

California is moving quickly to address all these issues. It's set up the California Health Benefit Exchange, which will be the primary consumer marketplace for individual and small group coverage once the law takes effect in 2014.

Few states have gotten that far, in part because the health care overhaul became law on March 23, 2010, as many part-time legislatures were winding up their sessions. When they returned this year, many states had new governors and in many cases, different parties were in control of one or both legislative houses.

Some of the newcomers deeply dislike the law. South Carolina's Haley argues that it's "one we do not want and cannot afford," and complained that it's a "massive mandate from Washington."

However, the South Carolina Public Health Institute and several other organizations have formed a coalition to promote the successful implementation of the health care law in the state.

Frank Knapp, the president of the South Carolina Small Business Chamber of Commerce and a founding coalition member, said the state's Department of Insurance "had been moving forward with implementation plans (and) now must wait for direction from the new governor."

Knapp is concerned: "We need to move forward."

ON THE WEB

Health and Human Services implementation center

Fiscal survey of the states

California Health Benefit Exchange

Gov. Haley's website

National Academy for State Health Policy recommendations

Kaiser/Harvard poll

Recession's impact on state budgets

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For more McClatchy politics coverage visit Planet Washington

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