feature | UPDATE ON FEDERAL HEALTH CARE REFORM
A BIG DOSE OF CHANGE
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FEDERAL HEALTH CARE REFORM’S IMPACT ON THE STATES
MEDICAID ELIGIBILITY
States can provide coverage to parents and childless adults up to 133 percent of the federal poverty level now at current federal match rates. By 2014, that coverage will be required for all U.S. citizens and legal immigrants under age 65 who earn up to 133 percent of the federal poverty level.
FUNDING
The federal government will cover 100 percent of the cost for these new Medicaid enrollees from 2014 to 2016; 95 percent in 2017; 94 percent in 2018; 93 percent in 2019; and 90 percent after 2020.
EXCEPTIONS
States that have already expanded Medicaid coverage—including Maine, Massachusetts, Minnesota, Wisconsin and a few others—will get a different package of Medicaid financial assistance. Those states’ Medicaid funding levels would be reduced to 50 percent in 2014, 60 percent in 2015, 70 percent in 2016, 80 percent in 2017 and 90 percent in 2018 when all states will reach the same funding formula for adults, except for pregnant women.
REGULATIONS ENFORCEMENT
States will be in charge of enforcing new rules for private health insurance plans, including prohibitions on pre-existing conditions, lifetime and annual caps and plan rescissions, reviewing rates and the solvency of plans, and overseeing various other requirements.
OVERSIGHT
States will create health insurance exchanges to fill the coverage gap for the one-third of uninsured Americans who don’t have access to an employer-sponsored plan but have incomes that disqualify them from Medicaid.
MANAGEMENT
State governments may administer these exchanges or set up a nonprofit association to do so. Only Massachusetts, Utah and Washington have such exchanges. States will also be allowed to form multi-state exchanges to take advantage of administrative efficiencies.
OMBUDSMAN
ASSISTANCE
REPORTING
DEADLINE
States must create a consumer assistance office or ombudsman’s program to help people in the individual and small-group health insurance markets navigate the new system. States will be required to report on trends in insurance premiums and identify plans that have had unjustified premium increases.
People whose incomes are between 133 percent and 400 percent of the federal poverty level will be eligible for federally financed subsidies, but must purchase insurance through the exchanges. States must have the exchanges in place for individuals and small businesses with 50 to 100 employees by 2014. In 2017, states can open the exchanges to businesses with more than 100 employees.
OVERSIGHT
The state exchanges will provide oversight of health plans with regard to the new insurance market regulations, consumer protections, rate reviews, solvency, reserve fund requirements and premium taxes. They will also define rating areas—those geographic areas that are covered in a single risk pool.
States must maintain their current eligibility levels for Medicaid. But, states are exempt from this if they can prove they are experiencing a budget deficit under rules yet to be drafted.
CAPITOL IDEAS
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MAY/JUNE 2010
COVERAGE GAP
While some rules will be set at the federal level, state insurance commissioners will continue to have important oversight. Exactly how the state-federal regulatory relationship will work is unclear.
EXEMPTIONS 44
STATE EXCHANGES
17
million adults— 37 percent of the nation’s uninsured—will be covered under this overhaul, according to the Kaiser Family Foundation.
95
$
or 1 percent of taxable income, whichever is greater—that’s the penalty for individuals who do not have health insurance coverage by 2014. The penalty will increase in subsequent years.
24
million people will purchase insurance through the exchanges by 2019, according to Congressional Budget Office estimates.
