No "wait and see" approach for Medicaid expansion

Will the Patient Protection and Affordable Care Act (PPACA) survive in its current state, be significantly altered, or even be repealed altogether? More than two dozen cases in federal courts across the country are currently challenging various aspects of the law, notes Stan Dorn, a senior fellow at the Urban Institute in Washington, DC.

In December 2010, a Virginia federal judge ruled that it is unconstitutional for the government to compel Americans to buy health insurance. However, the ruling did not force federal and state officials to stop the work of putting PPACA into effect, says Mr. Dorn.

"The Attorney General brought suit and got a favorable decision in the district court; but despite that action taken at the executive level of Virginia state government, there is still a lot of planning process at the agency level," says Mr. Dorn.

Mr. Dorn says that there is "an interesting dichotomy between the top-level political leadership, which in some cases has been very hostile to the federal legislation, and agency staff, which is moving ahead in a very practical way and trying to make sure that residents benefit from the federal law."

Still, Mr. Dorn acknowledges there is some uncertainty, "and that has to affect people's attitudes in moving forward."

Behind-the-scenes work

Mr. Dorn says that despite the turmoil in the headlines, a lot of work is taking place "behind the scenes," as states move forward with implementing the federal law.

"State officials understand that it will take everything they have to implement this law," says Mr. Dorn. "They can't sit around and wait, based on the possibility that it could be repealed or greatly changed."

Mr. Dorn says that "if officials do sit and wait, and the law remains in place, they will be lost. State agencies are moving ahead full speed. At the same time, they are keeping one eye over their shoulder, understanding that things could change dramatically between now and 2014."

This is a definite challenge, he says, "but state health officials are used to very challenging situations. The budget situation in most states is horrendous right now. That is a huge challenge."

Mr. Dorn notes that states moved forward with the Children's Health Insurance Program (CHIP), regardless of the fact that it had a finite life. "It was subject to tremendous federal wrangling between Congress and the Bush administration before it finally got extended in 2009," he says, yet state officials continued implementing innovative strategies to cover otherwise uninsured children. "So, we're dealing with a hardy bunch."

If states don't move ahead with vigor, adds Mr. Dorn, they will lose out to other states. "In many cases, there are only so many federal grants available, and only so many federal demonstration projects that will take place," he says. If one state doesn't move forward, another will be glad to take that available federal dollar or that available federal option, Mr. Dorn says.

Planning work continues

Toby Douglas, chief deputy director of the California Department of Health Care Services and the state's Medi-Cal director, says that the planning process is not being affected in any way due to uncertainty over health care reform's future.

The most important unanswered questions for Mr. Douglas right now, he says, are "the state budget deficit, the state's approach to eligibility systems development, and the need for federal guidance on modified adjusted gross income rules."

Charles Duarte, administrator for Nevada's Division of Health Care Financing and Policy, says, "We are working under the philosophy that the ACA is the law until it is not the law. Therefore, planning and implementation work is continuing."

Mr. Duarte says that first and foremost, he is waiting to see whether the federal government will fully fund the development of the health insurance exchange that will serve as an insurance marketplace in 2014. "There are many, many other questions, but that one is key," says Mr. Duarte. "There also remain numerous policy decisions to be made at the state level, which will require the involvement of the governor-elect and the legislature."

Donna Friedsam, health policy programs director at the University of Wisconsin Population Health Institute in Madison, notes that Wisconsin elected a Republican governor and Republican-controlled legislature, a change-over from a Democratic governor and legislature.

Gov.-elect Scott Walker plans to authorize Wisconsin to join the state lawsuit against the PPACA, and he opposes the individual mandate, adds Ms. Friedsam. "He is not favorable to most of the provisions, although he has signaled interest in building a free-market-oriented insurance purchasing exchange," she says.

Ms. Friedsam says regarding Medicaid, the Governor-elect and new legislature are going to look for ways to roll back Wisconsin's "currently very generous" eligibility rules that cover children up to 300% of Federal Poverty Level (FPL), and parents/caretakers and childless adults up to 200% FPL.

"The ACA, of course, contains maintenance of effort provisions for children's coverage through 2019," says Ms. Friedsam, noting that states with deficits do not have to meet maintenance of effort provisions for adults.

"In terms of the uncertainty in Washington, our state's new governor is counting on the roll-backs at the federal level to enable him to pursue his agenda," says Ms. Friedsam. "He does not want to be bound by federal requirements for operating exchanges or regulating insurance."

Ms. Friedsam reports that Wisconsin's advanced eligibility and enrollment system, ACCESS, utilized for its Medicaid/CHIP programs, is currently being engineered to operate for use by a potential exchange. "This work continues. The ACA is still the law, and the funding continues to flow to states to put these systems in place," says Ms. Friedsam. "This is occurring at a staff level. I believe other states are still proceeding in this manner as well."

Ms. Friedsam says that she wouldn't characterize the approach as "wait and see" but rather, "proceeding cautiously." However, she acknowledges that uncertainty is difficult in any business environment.

"Soon enough, policy decisions that occur at the federal and state levels will affect the on-the-ground planning and contracting decisions being made in agencies," says Ms. Friedsam.

Contact Mr. Dorn at (202) 261-5561 or sdorn@urban.org, Mr. Douglas at Toby.Douglas@dhcs.ca.gov, Mr. Duarte at (775) 684-3677 or cduarte@dhcfp.nv.gov, and Ms. Friedsam at (608) 263-4881 or dafriedsam@wisc.edu.