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Looking Back, Heading Forward: A Checkpoint on the Road to Reform

Roughly one year ago, the Senate was poised to pass its version of the health reform law and congressional Democrats were crowing over what seemed a near-certain legislative triumph.

This December reveals a radically different landscape: even as regulators speed forward on implementing the law, Republicans’ political resurgence and constitutional questions are strengthening resistance to the overhaul.

As 2010 comes to an end, it’s clear that the federal health reform law remains very much a work-in-progress — and that the path to implementing its provisions may wind through potential political and judicial detours.

This year’s final edition of “Road to Reform” provides a roadmap to some of 2010’s key reforms, delayed decisions and the questions that remain unanswered heading into 2011.   

Under Way in 2010: Insurance Regulations, Preparations for the Future

Although many provisions that took effect in 2010 simply lay the groundwork for future reforms, the law’s proponents argue that substantive changes already are under way.

The White House has touted its Patients’ Bill of Rights, a blueprint of insurance industry reforms that took effect this year. The rules prohibited insurers from denying coverage to children with pre-existing conditions, ended lifetime limits on insurance benefits and restricted insurers’ ability to cancel policies once consumers filed for support, among other reforms.

Supporters of the federal health reform law also are citing a recent letter that CalPERS sent to HHS describing how the overhaul is benefiting Californians. The pension system — one of the largest purchasers of health coverage in the nation — says that it has taken steps to extend dependent health coverage to more than 27,000 young adults and reduce health insurance premiums by more than 3% for retirees and their families.

At the same time, HHS is sprinting ahead on developing and implementing dozens of provisions slated to take effect within the next three years. The New York Times notes that more than 200 health regulators have taken residence in three floors of an office building outside of Washington, D.C., “paying almost double the market rate for the space in their rush to get started” on key insurance rules. According to Paul Dennett — senior vice president of the American Benefits Council, a trade group for large employers — “there has never been a period like what we are going through now, in terms of the sheer volume and complexity of rule-making.”

Regulators have adopted 18 new rules since the reform law was passed in March, such as regulations that tax indoor tanning or create insurance pools for individuals with pre-existing conditions. However, regulators only sought public comment on 12 of the 18 rules after first adopting preliminary regulations, according to a new report from the Congressional Research Service. Normally, regulators seek out comments before interim final rules take effect. In these dozen cases, officials justified their decisions to limit comments by arguing that the law forced them to quickly institute the regulations, according to The Hill.

Tabled for 2011: Key Rules, Tweaks to the Law and State-Level Legislation

The boom time for rule-making has had another adverse side effect:  Officials are running behind on many regulations.

A CRS report found that HHS had missed seven of 22 deadlines mandated by the federal health reform law as of Sept. 23; the department had missed at least four more deadlines as of Nov. 16, with dozens of additional deadlines slated for the next 90 days.

CRS notes that many of the deadlines in the reform law are subject only to congressional pressure and lack legislative “hammers,” such as a congressionally designed alternative that automatically takes effect or cut to department funding. Many of the missed deadlines concerned relatively obscure provisions or were overdue by only a few days, but some delays carry more import.

CMS Adminstrator Don Berwick announced last week that the agency’s rules governing the formation of accountable care organizations might be delayed by at least one month. Health care providers eagerly await these regulations, in no small part because hospitals and physicians already are forming alliances that could be proven to be illegal, pending the final ACO rules.

As rule-making progresses, lawmakers likely will continue their attempts to reform the reform law when the 112th Congress convenes in January and Republicans assume control of the House. One probable target for change: the 1099 tax-reporting requirement in the federal health reform law. Although there’s bipartisan agreement on repealing the provision, lawmakers have failed in several attempts, largely because of disagreements over cost offsets for the $19.2 billion in revenue the measure is projected to generate over 10 years.

Meanwhile, despite California’s aggressive efforts to implement the federal health reform law, “there’s much left to do to fulfill the promise of reform” in the Golden State, according to Anthony Wright, executive director of Health Access California. Wright told California Healthline that state officials still must craft legislation to “both conform to the federal law and to create a smooth ‘glide path’ between the ‘wild west’ insurance market of today and the more consumer-friendly market in 2014.” According to Wright, Gov. Arnold Schwarzenegger (R) vetoed several bills that would have helped ease the transition, such as legislation intended to phase in maternity coverage or better categorize information about insurance plans for consumers.

Still Unresolved: Questions Over Law’s Future

Casting a shadow over all reform efforts, U.S. District Court Judge Henry Hudson ruled this week that the federal health reform law’s individual mandate is unconstitutional. At the same time, the ruling — which marks the first time that a judge has struck down a central provision in the overhaul — neither invalidated the law nor blocked its implementation, leading to vastly different interpretations.

The Obama administration has stressed that the ruling has “no practical impact” on the overhaul, and President Obama predicted that Democrats ultimately would prevail in the mid-level and high courts, noting that two other federal judges had ruled the law and individual mandate to be constitutional. Stephanie Cutter, assistant to the president for special projects, wrote that the White House is pleased that “Hudson agrees that implementation of the law will continue uninterrupted.”

However, even if Cutter’s assertion is technically true, Hudson’s ruling adds to the specter of repeal, which may dissuade states from moving forward until constitutional questions are resolved.

John Graham, director of health care studies at the Pacific Research Institute, told California Healthline that he suspects California will remain the lone state to pass and implement a health insurance exchange as called for by the reform law. “It’s just too risky to ramp up a new bureaucracy that will cost tens of millions of dollars to implement a law that is unconstitutional and likely to be repealed,” added Graham.

Road to Reform will return in 2011. Until then, here’s a look at other recent health reform developments.

Challenging the Overhaul

  • Last week, a federal district court judge in New Jersey dismissed a lawsuit filed by a physician group and several individuals challenging the constitutionality of the federal health reform law. The physician group — New Jersey Physicians — and the individuals claimed the individual mandate in the overhaul exceeded the powers granted to Congress via the commerce clause in the Constitution. U.S. District Judge Susan Wigenton granted the motion by the Department of Justice to dismiss the case before oral arguments, ruling that the plaintiffs did not have the standing to bring the case (Norman, CQ HealthBeat, 12/8).
  • Meanwhile, the Florida Senate has revived a proposed constitutional amendment designed to block the federal health reform law from requiring people to buy insurance or face a penalty. If 60% of voters in the 2012 election approve the measure, legislators would be prohibited from enacting an individual mandate for health insurance. The Legislature passed a similar amendment last year, but it was struck down by the courts for having a misleading summary that included political statements unrelated to the amendment. Senate President Mike Haridopolos (R) said the questionable language was removed (Caputo, Miami Herald, 12/9).

Rolling Out the Reform Law

  • Federal rulemakers are finding themselves in a powerful position as they continue to work through hundreds of regulations within the federal health reform law that will affect most U.S. residents. In total, the bills call for drafting more than 300 rules on a rolling schedule by 2014, and a report from the Congressional Research Service said the publication of rules under the law could continue for decades. It is estimated that several hundred federal employees across several agencies are working on these rules and will continue to do so for years to come (Lichtblau/Pear, New York Times, 12/8).
  • Last week, a 17-member task force began developing a plan to implement the Wyoming’s health insurance exchange under the health reform law. The task force is choosing between establishing a state exchange, building a regional exchange with surrounding states or allowing the federal government to set up the state’s exchange. The deadline to submit a plan to Gov.-elect Matt Mead (R) and the legislature is spring 2011. State House Committee on Labor, Health and Social Services Chair Elaine Harvey (R), one of the members of the task force, is concerned that the state’s population might be too small to produce an effective pool (Barron, Casper Star-Tribune/Billings Gazette, 12/7).

Spotlight on ‘Mini-Med’ Plans

  • The Obama administration recently granted more waivers to businesses that offer low-cost “mini-med” health plans, such as Waffle House and Universal Orlando, bringing the total number of waivers to 222. According to a list on HHS‘ website, the number of companies that have received such waivers has doubled since the site was last updated in mid-November. A diverse selection of companies have received the waivers, including Catholic Charities of the Diocese of Ogdensburg and the Pearson Candy Company (Dupree, “Washington Insider,” Atlanta Journal-Constitution, 12/7).
  • Last week, HHS outlined the only circumstances under which insurers can offer limited health plans, also known as “mini-med” plans, and mandated that plans must include warnings noting that they do not meet new minimum coverage standards under the federal health reform law. The department is concerned that the waivers will prompt insurers to offer limited coverage until the reform law outlaws such plans in 2014. HHS Secretary Kathleen Sebelius sent letters to consumer groups informing them of the new notice requirements. The agency also stressed that the waivers expire after one year (Bunis, CQ HealthBeat, 12/9).

Tweaking the Overhaul

  • Last week, the Senate voted to repair an error in the federal health law that would have added millions of dollars in drug costs for hospitals that treat children with rare conditions. Over the last 18 years, Congress has required drugmakers to provide discounts to various health care providers, including children’s hospitals. When lawmakers revised the discount drug program as part of the health reform law, they mistakenly barred children’s hospitals from continuing to receive the price cuts. The fix is included in recently passed legislation that will continue the current Medicare physician payment formula and delay scheduled payment reductions (Viser, Boston Globe, 12/9).
  • Lawmakers recently acknowledged that they have run out of time during the “lame duck” legislative session to repeal the 1099 tax-reporting requirement in the federal health reform law. However, members of both parties pledged to renew efforts to eliminate the provision when Congress reconvenes in January. Despite bipartisan agreement on repealing the provision, lawmakers have failed in several attempts, largely because disagreements over cost offsets for the $19.2 billion in revenue the measure is projected to generate over 10 years (Ethridge, CQ Today, 12/13).

In Public Opinion

  • U.S. residents remain divided over the federal health reform law, with 28% wanting to repeal it, 31% favoring its implementation and 29% unsure of what should be done, according to a new according to a new poll by Harris Interactive/HealthDay. The poll found that two-thirds of respondents favor a provision in the reform law that prevents insurers from denying coverage to people with pre-existing conditions, while 60% approve of the provision that allows small businesses to qualify for health care tax credits. However, 57% of respondents said they oppose the reform law’s individual mandate (Gardner, HealthDay, 12/6).
  • Meanwhile, two other polls also found that U.S. residents remain divided over the federal health reform law. The first poll, from ABC News/Washington Post, found that overall support for the law has declined to 43%, down from a peak of 48% one year ago (Adams, CQ HealthBeat, 12/13). In addition, a separate poll conducted by the Kaiser Family Foundation found that 42% of respondents said they view the overhaul at least somewhat favorably, while 41% view it unfavorably (Miles, Kaiser Health News, 12/13).


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