With PPACA Permanent, States Must Decide on Implementation

Now that the re-election of President Obama has eliminated the possibility that the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) could be repealed, states that delayed implementing the law must decide what to do about the Medicaid expansion, the health insurance exchanges, and a host of related issues. The governors of Florida, Louisiana, and Texas, among others, all expressed unwavering opposition to taking any action to implement PPACA. But that may be changing.

On November 15, 2012, HHS Secretary Kathleen Sebelius extended the November 16th deadline for states to notify HHS whether they intended to operate health insurance exchanges. She also extended the deadline to submit documents for a partnership exchange, in which states share responsibility with the federal government, to February 13, 2013. According to the Center for Budget and Policy Priorities, during November, 2012, the governors of Alabama, Alaska, Georgia, Indiana, Kansas, Missouri, Nebraska, Oklahoma, South Carolina, Virginia, Wisconsin, and Wyoming all sent letters to HHS stating that they would not create the exchanges. Governor Terry Branstad of Iowa wrote that the state could not make a decision without answers to 50 questions. (Many of the questions repeated those submitted by the Republican Governors Policy Committee in a letter to President Obama in July.)

Ohio Governor John Kasich wrote Secretary Sebelius that the state would let the federal government handle the exchange but would not allow it to make determinations of Medicaid eligibility or to regulate insurance within the state. But, because the deadline for the blueprint had been extended, he reserved the right to change his mind based on any guidance that HHS may issue, and he designated a state official to work with HHS on the exchange.

Rick Scott, Florida’s Republican governor, who helped lead the states in the lawsuit challenging the Act, has softened his opposition, however. He announced last week that he would negotiate with HHS on the establishment of the exchange. And the new president of the state senate, Don Gaetz (R) is forming a select committee to study the implementation of PPACA. Florida actually has already established an insurance marketplace for small business, Florida Health Choices, so much of the technology needed for an exchange is already in place.

Fewer states have made definite commitments whether to implement PPACA’s Medicaid expansion. Until the Supreme Court’s decision, there was not much for them to decide. The possibility of refusing the expansion and maintaining existing Medicaid programs wasn’t on anyone’s radar. Many of the same states that have refused to participate in the exchanges also have announced that they will not expand Medicaid, either. But more states are undecided because there are many open questions about the possible terms of the expansion.

  • Will the enhanced federal matching funds be available to states who want to use a lower income limit for the newly eligible, such as 100 percent rather than 133 percent of the federal poverty level (FPL)?
  • What maintenance of effort requirements will apply?
  • Can states phase in the new eligibility groups beginning in 2014?  If so, will the enhanced federal funds be available?
  • How, if at all, will the costs of furnishing care to undocumented immigrants be reimbursed, given that these individuals are not eligible to join exchanges and are exempt from the individual mandate?