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.