Early in 2019, more than 20 governors identified affordable insurance coverage and rising health care costs as critical policy issues that needed to be addressed in their state of the state addresses. Highlighted below are some of the significant steps states took in the past 12 months to expand coverage and tackle health costs, including expanding Medicaid, establishing new coverage programs, transitioning from the federally-facilitated marketplace to state-based exchanges, and continuing efforts to rein in drug prices.
Washington State enacted a first-in-the-nation quasi-public option requiring the state’s Health Care Authority to contract directly with at least one commercial carrier to offer coverage through the state’s health insurance marketplace. This ensures individuals who are eligible for cost-sharing subsidies will be able to choose the public option without losing their advanced premium tax credit. The law requires standard plan design that provides specific benefits and limits consumer cost sharing. Further, the law allows the state to regulate certain health care prices, such as provider and facility reimbursement rates, which will be capped at 160 percent of Medicare rates.
The Colorado legislature passed a similar bill with support from Gov. Jared Polis that requires the state to develop a proposal for an affordable state coverage option. In November, the state finalized its proposal to allow residents who buy individual health insurance to purchase a state public option plan. If approved by the state legislature and the federal government, coverage under the option will begin in January 2022.
California enacted a law to provide government-subsidized health benefits to undocumented immigrants. California had been one of six states plus Washington, DC to use state funds to cover income-eligible children regardless of their immigration status. The new law expands coverage to undocumented, income-eligible young adults through age 25, expanding the availability of state-subsidize health care to more Californians.
Maine implemented the Affordable Care Act’s (ACA) Medicaid expansion two years after voters passed it by ballot referendum because the previous governor refused to implement the policy. As she promised, Gov. Janet Mills enforced the law and sought federal approval to extend Medicaid coverage to about 36,000 Mainers.
Georgia Gov. Brian Kemp announced in his state of the state address that he included $1 million in the budget to craft state flexibility options for Georgia’s Medicaid program. Kemp then worked with the legislature to pass the Patients First Act, authorizing the state to seek federal approval for waivers to implement an alternative Medicaid expansion model and to pursue a range of options affecting individual market coverage. The state released draft versions of those waivers this fall. The state is now seeking approval to operate its own coverage subsidy program that would include a cap on enrollment if costs reach a certain threshold. The initiative would also allow consumers to purchase state-certified, non-qualified health plans that will not be required to meet quality health plan standards, such as the Essential Health Benefit. The state’s 1115 wavier seeks to expand Medicaid to residents earning up to 100 percent of the federal poverty line, and it includes a work requirement.
There has been increased interest among states that used the federally facilitated marketplace (FFM)to transition to state-based marketplaces (SBM). Nevada was the first to transition from the federal platform to an entirely state-run marketplace. It launched this year in time to enroll individuals into qualified health plans for plan year 2020. In making this shift, Nevada will have more autonomy over operations, can tailor policies for its residents’ unique needs, and expects to save millions of dollars.
New Jersey, Pennsylvania, and Maine are on track to follow in Nevada’s footsteps. In announcing Maine’s plans to create its own marketplace by plan year 2021, Mills noted that states operating their own SBMs have performed better on both enrollment and reducing cost of premiums than those using the FFM. Transitioning to a state-based marketplace allows states flexibility, such as working with health plans to extend the open enrollment period, as well as increasing access to enrollment data and targeting outreach funding.
This year, states took a wide variety of approaches seeking to increase health care affordability for consumers, including the establishing of reinsurance programs, creating spending growth targets, and increasing subsidies through tax credits for middle-class marketplace enrollees. In the absence of federal action, a growing number of states are also helping patients avoid costly surprise medical bills.
Reinsurance programs can lower premiums and stabilize markets by offsetting the costs of more-expensive claims for carriers. During the 2019 legislative session, with support from its governor, Colorado joined 11 other states that currently operate reinsurance programs. Since the program received federal approval, health insurance rates fell an average of 20.2 percent in the state. Officials predict that lower premiums may encourage uninsured Coloradans to purchase coverage and lower the overall uninsured rate in the state.
In Rhode Island, Gov. Gina Raimondo signed an executive order establishing a 3.2 percent growth target for health care spending. The executive order charges the state’s Office of Health Insurance and the Executive Office of Health and Human Services to engage providers, insurers, and community partners in the initiative, and to issue annual reports to track the state’s progress in meeting health spending targets.
Lawmakers in California went a different route and established a state-level individual health insurance mandate similar to the original provision in the ACA that is no longer enforced, joining Massachusetts, New Jersey, Vermont and Washington, DC. They also allocated state funds to extend tax credits to help offset premiums for middle-class Californians who earn between 400 and 600 percent of the federal poverty limit who enroll in a health plan through the state’s marketplace. The mandate penalty is expected to generate about $295 million next year to help fund the subsidies that will make individual coverage more affordable for the middle class.
In Nevada, Gov. Steve Sisolak signed a bill into law to prohibit the practice of surprise balance billing. The law holds patients harmless for surprise balance medical bills, only requiring enrollees to pay applicable cost-sharing amounts. The law creates a binding arbitration process that requires insurers and providers to submit their proposed reimbursement rates to a neutral arbitrator who selects one of the parties’ rates. Nevada joined other states that have taken action to protect consumers from unexpected medical bills this year.
Addressing Prescription Drug Costs
NASHP has been tracking state legislative action on drug costs since 2016. This year, states continued to take steps to rein in drug costs, from passing legislation to create wholesale drug importation programs to regulating pharmacy benefit managers (PBMs) more aggressively.
Following Vermont’s lead, Florida, Colorado and Maine enacted laws to start the process of creating a wholesale importation program to import drugs from Canada at lower prices. While states will need federal approval to implement their programs, the Trump Administration released the Safe Importation Action Plan that lays the foundation for the federal rule-making process. Rules to implement the program are expected to be released by the Administration this week.
States continued efforts to better understand PBM operations and regulate them. At an administrative level, Ohio, Washington, and West Virginia asserted their purchasing power to capture savings for Medicaid through more active oversight of prescription drug benefits. In Nevada, lawmakers gave their Department of Health and Human Services the option to carve pharmacy benefits out of Medicaid managed care contracts so the state could negotiate directly with manufacturers. Carving out the pharmacy benefit gives the department direct control over negotiations with PBMs and ensures that any rebates or discounts from drug manufacturers flow to the state rather than a third party. Maine took a different approach and now requires more health plan oversight of PBMs.By tasking carriers with PBM monitoring responsibilities, Maine is using its Bureau of Insurance regulatory authority to enforce other provisions of its PBM law.
The new PBM law in Maine was just one piece of a comprehensive suite of legislation aimed at controlling drug costs in the state. Three additional new laws include updates to Maine’s existing drug transparency program, the creation of a drug affordability board, and support for the state to pursue a wholesale drug importation program. These laws work in conjunction with each other to create an infrastructure through which the state can gather actionable data and hold all players in the drug supply chain accountable.
While this summary doesn’t capture all of the activity and progress made by states during 2019 to expand coverage, increase affordability, and address costs, it shows the diversity of actions that states have taken. As we look ahead to 2020, we anticipate states will continue to make health coverage and costs a priority. The National Academy for State Health Policy will continue tracking those efforts, sharing promising practices, and supporting states in their health care goals.
https://nashp.org/wp-content/uploads/2019/09/Cost-Payment-and-Delivery-Reform-1.jpg36485472Melanie Felicianohttps://nashp.org/wp-content/uploads/2019/06/NASHP-Logo.pngMelanie Feliciano2019-12-16 18:48:002019-12-17 13:14:18What States Did in 2019 to Address Health Coverage and Costs