States lurch toward health care reform

States are moving toward health care reform but not without significant challenges. Nearly every aspect of federal health care reform legislation has been politicized and yet federal deadlines loom large.

Federal health care reform legislation created new and significant requirements for states to comply with leading many states to launch court challenges claiming overreach and unconstitutionality. They have had enough success that the Supreme Court is expected to issue a final ruling later this year.

However, in the interim the deadlines remain and states – even those that aren’t opposed to the measure are running out of time. Vermont and New Jersey are the two latest states to take up debate on whether to institute state run health insurance exchanges.

Health officials in New Jersey are applying for funds even as debate continues in the legislature in order to make sure they meet a fast approaching set of deadlines. The federal government is offering states funding assistance to set up their own exchanges. However, the application deadline for those funds this year. States then only have until 2013 to use those funds and build the exchange. Funds that aren’t used by the 2013 deadline will be revoked and exchanges that aren’t online by the 2014 deadline will be federally administered.

This timeline doesn’t provide states with the luxury of time that politicization requires. States waiting for the late year court ruling may find themselves boxed out of funding support ushering in a new level of federal control.

In Vermont the legislature will take up debate over their exchange today with the goal of implementing a statewide single payer health care system which local republicans actively oppose. They are expected to offer amendments making participation in the exchange voluntary rather than mandatory as required by federal law.

The federal government just approved hundreds of millions of loan funds to states for the creation of non-profit cooperatives another key component of health care reform legislation. Proposals were approved in Nebraska, New York, New Jersey, Oregon, New Mexico, Montana and the city of Milwaukee. With still more in the pipeline.

These cooperatives are designed as a cost control by allowing them to provide lower cost alternative coverage on the exchanges. However, private insurers like WellPoint are making an end run around that by setting up private exchanges designed to compete with state and federal exchanges. Some Governors are supporting this like Tom Corbett of Pennsylvania who is attempting to advance a multi-exchange model in his state legislature.

Overall the mixed messages coming from statehouses are setting up risks if the courts side with the federal government are paving the way for increased consumer burdens. In California, insurers are planning an 8-14% rate hike, an increase which out paces the current costs of medical care. Insurers claim that these increases are necessary to offset health care cost inflation, but also follow a growing tend of premium increases ahead of limits imposed when health care reform comes fully online in 2014.

“Consumers should be outraged that premiums continue to grow faster than underlying costs,” said Gerald Kominski, director of the UCLA Center for Health Policy Research said in the Los Angeles Times. “There’s help on the horizon for millions of Californians from health reform, but things may get worse before they get better.”

A point that seems to be true for the nation.