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Commonwealth Fund: States Have Work to Do to Implement Health Law Market Rules

By Cristina Marcos, CQ Roll Call

February 1, 2014 -- Many states still need to either pass laws or issue new regulations that will enable them to enforce some critical health care law insurance provisions, something that could complicate nationwide implementation of the overhaul, according to a recent Commonwealth Fund analysis.

Uncertainty surrounding the law's fate, first because of the Supreme Court challenge to the measure and then because of the November elections, led some states to delay any action on this front. But the Commonwealth Fund's findings indicate that it is crucial for states to act this year in order to ensure that key components of the health care law (PL 111-148, PL 111-152) are implemented on schedule, and to avoid confusion between the state and federal governments.

These provisions include a ban on denying coverage to people with preexisting conditions, a ban on waiting periods, guaranteed access to coverage, restrictions on insurers to use gender or health status in setting premiums, and limits on out-of-pocket costs.

While 10 states did not respond to the fund's survey, the results from the others show that between January 2010 and October 2012 there were 11 states and the District of Columbia that addressed this issue legislatively or through regulation. Another eight states already had the needed authority to enforce market provisions, which are scheduled to go into effect in 2014.

As of October, Connecticut was the only state that responded to the survey that had addressed all seven market provisions. Arkansas, California, Maine, Hawaii, Iowa, Maryland, Massachusetts, New Hampshire, New York, New Jersey, North Carolina, North Dakota, Oregon, Rhode Island, Utah, Vermont, Washington, and the District of Columbia had either moved on at least one of the issues or had laws in place before the overhaul. For example, Massachusetts, Maine, New Jersey, New York, and Vermont had guaranteed coverage laws in place before the health law passed.

Katie Keith, the study's lead author, said that the impetus lies largely with state lawmakers—more so than regulators—because states will be the primary enforcers of the sweeping overhaul. While states likely already have some regulatory tools at their disposal for enforcement, the analysis said that legislation would provide stronger authority.

"It's really getting that point across to state legislators of what happens if the state doesn't make changes to prepare," Keith said an interview. "We really think that state legislation is going to be necessary."

The report recommended that federal regulators outline an enforcement standard to provide lawmakers with guidelines for "how much time, energy and political capital should be used to pass new legislation or issue new regulations in 2013." In the event states do not amend their existing laws, state and federal regulators would likely have to figure out how to bridge the enforcement gaps.

There is some reason to believe the states will act on time. A prior study by these authors found that most states took action to implement major provisions of the overhaul that have already taken effect, such as the one allowing people to stay on their parents' insurance as dependents until age 26.

Keith said they expected most states to ultimately align their rules with the changes that will take effect next year now that the new slate of state officials are in place. But she noted that further prolonging the policy adjustment process would reduce clarity about the law's implementation, making the next 11 months critical.

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