‘We’ll Deal With it Then’: The State of Play if ACA is Struck Down

by Dan Diamond, California Healthline Contributing Editor

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Twenty-eight states challenged the Affordable Care Act. And win or lose, all 50 will have to deal with the consequences.

But are the states actually ready to respond?

The answer is — literally — all over the map.

The National Conference of State Legislatures has prepared a visual guide to states’ progress on new health benefits exchanges. And as a benchmark, that progress is a telling indicator:

  • If the law stands, states will have about 19 months to get their exchanges operational by 2014, or be prepared to let the federal government run the exchange instead.
  • Should the law fall, states are off the hook, at least with respect to the deadline.

Because each exchange promises to be a massive technical undertaking that incorporates Medicaid eligibility tracking and other back-end systems, many governors and legislatures are well into their planning efforts.

But as of March, the NCSL tracker shows that more than one-third of the states hadn’t even begun working up exchange legislation. (Many of these states are also involved in the lawsuit against the ACA).         

And whether SCOTUS finds in favor of the ACA or not, fewer than a dozen state legislatures will even be in session in June, when the decision is expected to come out, NCSL’s Dick Cauchi told California Healthline. And that means “10 or fewer states will be in any position to have any response [to] the court decision in this calendar year,” Cauchi added.

Here’s a look at how three states — including California — stand with respect to the ACA decision.

Maryland: Confident, if Unclear

States led by Democrats have made the most progress in implementing ACA provisions, either through legislation or governors’ executive orders, and few have been more progressive than Maryland.

The Old Line State has already created an exchange board, appointing its initial nine members and executive director; for those efforts, Maryland received more than $34 million in grants from the federal government, including an Early Innovator cooperative agreement. Meanwhile, both houses of Maryland’s state Legislature recently approved health benefits exchange legislation, which is now headed to conference committee.

But just because Maryland is well-prepared doesn’t mean its leaders have thought through all contingencies. Gov. Martin O’Malley said last week that he wasn’t sure how the state would respond if the high court struck down the ACA, taking away federal subsidies for the exchange.

“We’ll deal with that, and we’ll figure out other ways to move forward,” according to O’Malley.

Florida: Willful Ignorance

Meanwhile, some Republican-led states are moving forward on ACA planning, regardless of their political differences with the law.

Even Arizona — which is led by Republican Gov. Jan Brewer, who’s been critical of President Obama and worked to ration the state’s health care services — has a fallback plan if the ACA is upheld and new federal requirements take effect. “We hope for the best but plan for the worst,” according to Brewer’s health policy adviser.

But Florida — which is leading the lawsuit against the ACA and has more than four million uninsured residents — has notoriously lagged on implementation. The state has returned about $35 million in federal planning grants, and lawmakers are refusing to move on exchange legislation.

That’s partly because Gov. Rick Scott — who campaigned for office on an “Anti-ObamaCare” platform — has been among the nation’s most prominent opponents of the ACA. And Scott maintains that until the law is officially upheld by the Supreme Court, Florida won’t move forward on implementing its provisions.

Still, the state may be able to draw on an insurance marketplace previously created by Florida Health Choices, a local not-for-profit, if it has to rush a health exchange into existence.

California: Full Speed Ahead

If Florida’s willfully ignoring the ACA, perhaps California is being blissfully ignorant. The Golden State was the first state to enact a health benefits exchange, and its leaders are determined to move forward with new health reforms, regardless of the Supreme Court’s decision.

For instance, State HHS Secretary Diana Dooley suggested that California should consider enacting its own version of universal health care coverage, complete with an accompanying insurance mandate, if SCOTUS strikes the law down.

What would be harder for California to replace: the ACA’s Medicaid expansion, if that element of the law is deemed unconstitutional. The state moved quickly to implement interim health insurance programs to help transition low-income Californians, ahead of the 2014 expansion. By the end of January, nearly 50 counties had set up such programs, covering about 370,000 residents.

But if the Medicaid expansion falls, hundreds of thousands of Californians could lose coverage, according to Anthony Wright, executive director of Health Access California.

The counties instituted the programs as a “bridge to health care reform,” Wright said. “Now, these expansions could turn into a bridge to nowhere.”

Looking Forward

If the law goes, some states may turn to the Massachusetts or Utah models for state-based health reforms. Other states also are exploring new frameworks, like Vermont’s interest in a single-payer system.

One challenge in making alternate plans: The White House and Congress aren’t leading the way. With both Democrats and Republicans counting on victory — and hoping to project confidence — senior leaders from both sides of the aisle say there hasn’t been much contingency planning whether the ACA’s upheld or struck down.

“I think the law is going to be found constitutional, and if not we’ll have to deal with it then,” according to California Rep. Henry Waxman (D).

Meanwhile, “Road to Reform” is preparing for all contingencies — whether SCOTUS rules for the ACA, against it, or merely decides to flip a coin. Until that happens, here’s a look at what else is making news across the nation.

Eye on the Courts

  • On Friday, the U.S. Supreme Court‘s nine justices were expected to hold a vote to weigh in on the lawsuit against the federal health reform law (Wolf, USA Today, 3/29). Legal experts familiar said the private meeting likely would not include further discussion on the law. After the vote, the justices were expected to decide who will draft the majority opinion and any concurring or dissenting opinions. Decisions on the most prominent cases tend to be issued on the last day of the court’s term at the end of June (Sherman, AP/UT-San Diego, 3/29).
  • A Republican National Committee advertisement released online used altered audio clips of last week’s U.S. Supreme Court oral arguments to magnify the difficulty that U.S. Solicitor General Donald Verrilli faced in defending the federal health reform law’s individual mandate (Hirschfeld Davis/Stohr, Bloomberg, 3/30). The ad included an image of the high court behind with the words, “Obamacare. It’s a tough sell” (Daniel, AP/Sacramento Bee, 3/30).
  • If the individual mandate in the federal overhaul is struck down by the U.S. Supreme Court, a similar mandate in Massachusetts’ 2006 health reform law could be at risk, according to legal experts.  George Washington University law professor Jeffrey Rosen noted that many opponents of the federal law believe that mandates are illegal at the federal and state levels. However, Massachusetts Attorney General Martha Coakley (D) pointed out that there have been no challenges to the state mandate since the law was enacted (Borchers, Boston Globe, 3/30).

Effects on Employers

Studying Its Effects

  • As many as 39,000 jobs in the medical device industry could be lost and more than $8 billion in economic output could be in jeopardy when a 2.3% excise tax on medical devices is implemented in January 2013 under the federal health reform law, according to a report by the Advanced Medical Technology Association (Daly, Modern Healthcare, 3/26).

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