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How States Are Taking the Lead in Health Care

Whichever side of the political divide you are on, health care reform is probably an important issue to you. Whether you want to repeal the Affordable Care Act, or you want to take it even further, you want our lawmakers to make changes to the current health care system. Or maybe, you are just concerned about what will happen the next time you or someone you love has to get medical care. That is why health care is a priority for voters and lawmakers.

Congress, under the leadership of President Donald Trump, has already attempted to abolish the Affordable Care Act several times in the past year but was unable to do so. This frustrated many of the conservative supporters who were eager to see President Barack Obama’s flagship legislation go down in flames.  It also inflamed many people who benefited from this law as well as those who would like Obamacare to include even more Americans.

The current political gridlock that prevents these changes has spurred more state governments to take the initiative in making health care reforms. States recognize that the current trends are untenable and that immediate action is needed. Health care prices have consistently risen faster than general inflation. This year, health care inflation will reach 2.2 percent while overall inflation is only 1.9 percent.  This means that insurance and other medical expenses will take a bigger bite out of household incomes in the coming years, unless something is done about it.

The Medicaid Expansion

When the Affordable Care Act was passed in 2010, one its key components was the expansion of Medicaid.  Medicaid is an insurance program for the poor and disabled that is administered by states, but primarily funded by the federal government.  Initially, the Affordable Care Act required that all states expand their Medicaid to include households up to 133 percent of the federal poverty level—up from 100 percent of the federal poverty level—but after a legal battle adjudicated by the U.S. Supreme Court, states could voluntarily opt into the Medicaid expansion.

The Medicaid Expansion

In return for expanding the eligibility criteria for Medicaid enrollment, the federal government would pay 100 percent of initial funding, dropping to 90 percent after a few years.  Initially, 24 states expanded their Medicaid program, followed soon after by 7 more states by 2016. By 2018, 33 states and the District of Columbia had opted into the Medicaid expansion.

Even more states could join the expansion in the near future.  Utah, Nebraska, Idaho and Montana are sponsoring voter referendums or initiatives to join the ACA expansion. Public support for expanding Medicaid is growing with almost two-thirds of the national population now in favor of it.

In some states, there is a burgeoning desire to opt into the Medicaid expansion.  In Virginia, almost 83 percent of likely voters support a Medicaid expansion, while 67 percent of Florida voters favor a Medicaid expansion.

Some states are also looking at options for people who earn too much to join Medicaid but lack other coverage options.  Many are considering a buy-in option for Medicaid, but critics argue that is not addressing the fundamental issue of skyrocketing health care costs. They also suggest that taking these people out of the private insurance pool will raise insurance premiums for those that remain.

Some States Move to Limit Medicaid Enrollment

On the other end of the spectrum, some states are trying to push some enrollees off of Medicaid’s rolls. Kentucky, Indiana, Arkansas, and New Hampshire are the first states to implement work requirements for their Medicaid enrollees, after the Trump administration approved the new eligibility criteria earlier in 2018. Arizona, Kansas, Maine, Mississippi, Ohio, Utah and Wisconsin could join them soon.

This summer, the U.S. District Court in Washington, D.C. heard a lawsuit brought by low-income Medicaid beneficiaries in Kentucky that challenges the legality of these new work requirements. These work requirements stipulate that enrollees must engage in 80 hours of work, education or volunteering every month to maintain eligibility.  Children, pregnant women, disabled persons, medically frail and full-time students are exempt from these work requirements.

On June 29, 2018, the U.S. District Court in Washington, D.C. struck down the Kentucky Medicaid work requirements, but did so in a narrow legal interpretation that leaves the door open for other legal challenges. The court ruled that in the future, the U.S. Department of Health and Human Services must consider if a work requirement would help enrollees obtain medical services.

Stepping In When the Federal Government

Because the federal government has been ineffective at lowering prescription drug costs, state legislatures are stepping up.  In 42 states, there are more than 163 bills that propose new ways to curb rising drug prices.  These include measures like importing wholesale drugs from foreign markets like Canada to mandating that pharmacists inform customers about lower-cost options.

Government Insurance Costs

In August, the Trump administration announced that it would allow consumers to purchase short-term policies for up to 12 months of coverage. These short-term policies were originally intended only for three-month periods and do not comply with ACA requirements like essential health benefits and non-discrimination against those with pre-existing conditions.

There has been some pushback on this policy change because policymakers want to protect consumers.  The governor of Maryland signed into law a three-month limit on these short-term policies, and Vermont has a similar law in place.  Hawaii now prohibits sale of short-term policies to consumers who are eligible for coverage from ACA health plans. Illinois passed new laws that limit coverage through these short-term policies to six months and requires a warning alert for potential consumers.

More states are also examining ways they can leverage their buying power. Because states purchase so much health care through Medicaid, state employee health programs and insurance marketplaces, they wield a great deal of influence on the local markets.  If they can properly harness this influence they could lower costs for a wide swath of the public.

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