President’s First Major Reform to Reform Law May Be DOA

After months of legal battles and an in-progress Republican effort to overturn the federal health law, nearly half of Americans think the law already has been repealed or aren’t sure.

President Obama’s announcement on Monday — that states should be able to immediately opt out of elements of the law — probably won’t clear up popular confusion. But, will it help Obama’s efforts to win political support for the overhaul?

Speaking at the National Governors Association meeting on Monday, Obama said he backs a bipartisan proposal (S 248) to allow states to obtain waivers for provisions in the federal health reform law as early as 2014, three years before the overhaul currently permits, if states can prove they are able to meet the law’s central goals on their own.

It’s the first time that the president has supported a major modification to his overhaul. However, the shift represents “political calculations, as much as policy ones,” the New York Times notes, and the well-publicized effort may not lead to any substantive changes.

Move Designed To Blunt Conservative Criticism …

Given Republicans’ multipronged attack on the health law — from their repeal effort in Congress to myriad legal challenges moving through the courts — the White House hopes that the concession will reduce criticism of the law and assuage disgruntled governors.

According to Drew Altman, president of the Kaiser Family Foundation, many states “contend they can do more with less if they get the flexibility to be more creative. … This puts the onus back on them and calls that into question.”

The move also reflects Obama’s effort to shift toward the political center. The president does not want to cede to governors’ calls to cut Medicaid enrollment, but “is trying to look flexible” in other ways, according to the Times.

… While Winning Over Liberal Base …

In an off-the-record call, the White House positioned the move as an opportunity to adopt more comprehensive reforms — such as expansive approaches to public insurance — and many liberal groups are hailing the opportunity.

According to Consumer Watchdog, the waivers free California and other states to rapidly adopt “ambitious reform plans that can pass at the ballot box in 24 states but would never get the time of day in Washington,” according to the group’s president, Jamie Court. For example, Vermont lawmakers are pushing for a single-payer plan and say the bill allows for necessary flexibility.

… But May Be Non-Starter With GOP

However, few Republican governors have come out in support of the proposal, and several were explicitly critical. Obama’s shift “doesn’t help us any,” according to South Carolina Gov. Nikki Haley. Louisiana Gov. Bobby Jindal acknowledged that “anything that gives the states more flexibility is a positive thing,” but states still face “onerous mandates” under the law. States also could face challenges proving they could meet the requirements for the federal waiver.

Meanwhile, House Republican leaders on Monday reiterated that they are seeking a full repeal of the law — and not just tweaking around the edges.

White House support for the legislation may actually strengthen Republican opposition to it, according to Washington Post columnist Ezra Klein. Rather than use the waiver proposal as an alternative to critique the current law, GOP leaders who back the bill could be perceived “as helping the White House in its efforts to defend the [federal health law] against repeal,” Klein writes.

California Healthline will continue to track efforts to reform — or repeal — the federal health reform law. Meanwhile, here’s what’s making news across the nation.

In the Courts

• On Monday, Washington state Gov. Chris Gregoire (D) sent a letter to U.S. District Court Judge Roger Vinson asking if she could weigh in on the multistate lawsuit against the federal health reform law. Gregoire argued that Washington state Attorney General Rob McKenna (R) should not block the state from benefiting from the law. McKenna is one of the attorneys general who has joined the multistate lawsuit (Haberkorn, Politico, 2/28).
• Although federal judges’ rulings on the constitutionality of the federal health reform law have been split along party lines, all agree that the fine for failing to obtain health coverage is a “penalty,” not a “tax.” The question of whether the fine is a penalty or a tax could have a bearing on its chances in the U.S. Supreme Court. The Constitution allows the federal government wide latitude to impose taxes for the general welfare, but not penalties (Millman, “Healthwatch,” The Hill, 2/27).

On the Hill

• On Wednesday, the House is expected to pass legislation (HR 705) that would repeal the 1099 tax-reporting requirement in the federal health reform law. Because the House and Senate versions of legislation to repeal the provision involve different cost offsets, it is unclear how lawmakers will reach a compromise. House Democrats oppose HR 705 because they say it constitutes a tax increase on low- and middle-income U.S. residents (Ethridge, CQ Today, 2/28).
• Republican leaders of the House Energy and Commerce Committee recently sent a letter to White House Deputy Chief of Staff Nancy-Ann DeParle requesting comprehensive information about the role of the White House Office of Health Reform in the debate over the federal health reform law (Millman, “Healthwatch,” The Hill, 2/18). DeParle, who previously oversaw the office, was promoted to her current role after the office was disbanded (Adams, CQ HealthBeat, 2/18).

Administration Actions

• In a recent letter responding to criticism from Republican governors that the federal health reform law is too costly and complex, HHS Secretary Kathleen Sebelius emphasized that the overhaul offers flexibility. The letter — released on Friday, the day before the National Governors Association winter meeting begins in Washington, D.C. — noted that the reform law allows states to pick which insurers will operate in their states and to decide which health insurance plans will be sold (Carey, Kaiser Health News, 2/25).
• Last week, HHS Secretary Kathleen Sebelius announced the availability of more than $4 billion for two programs in the federal health reform law that help Medicaid beneficiaries who had been living in institutions return to community living. Thirteen states will join 29 other states and the District of Columbia in the “Money Follows the Person” demonstration program. A second, related program — the Community First Choice Option — allows states to receive a 6% increase in federal matching funds for providing community-based, attendant services and support to Medicaid beneficiaries beginning in October (Zigmond, Modern Healthcare, 2/22).

In the States

• The Colorado Senate Health and Human Services Committee recently voted 8-1 to advance a bill (SB 128) mandating that any insurer offering individual adult health plans must also sell policies for children under age 19. Although the federal health reform law barred insurers from denying coverage to children with pre-existing conditions, many insurers chose to drop child-only plans to avoid handling an influx of kids with costly health needs. The bill now proceeds to the state Senate Finance Committee (Sealover, Denver Business Journal, 2/23).
• The North Carolina State House recently voted 69-49 to pass legislation that would challenge the individual mandate in the federal health reform law. The mandate requires that most residents by 2014 purchase health coverage or pay a penalty. The bill would block the mandate and give Attorney General Roy Cooper (D) authority to defend the challenge. The legislation now goes to Gov. Beverly Perdue (D), who has said she will allow it to become law without her signature (WRAL, 2/22).
• The West Virginia Senate Finance Committee has rejected a bill (HB 3018) proposing that West Virginia develop and run its own health insurance exchange under the reform law. Under the reform law, the federal government would run the state’s exchange if the state decided not to establish one (Messina, AP/Bloomberg, 2/23).

Analyzing the Overhaul

• The individual mandate in the federal health reform law might be unsuccessful because its penalty likely would be less costly than health insurance premiums, according to health care economists. With rules prohibiting insurers from denying coverage to people with pre-existing conditions set to begin in 2014 — the same year the individual mandate takes effect — insurers will need healthy individuals to purchase coverage to help offset the cost of covering sicker individuals. However, because the penalty for not purchasing coverage is so low, many healthy individuals might choose to forgo insurance (Nather, Politico, 3/1).