Obama signals flexibility on health reform mandates

Washington -- The White House has made more overtures toward states that have reservations about the health system reform law and want to take a different approach.

President Obama told state leaders during a National Governors Assn. meeting in Washington, D.C., on Feb. 28 that he would support allowing states to opt out of the national reform statute's mandates starting in 2014, instead of 2017 as allowed under current law. He cited a bipartisan bill sponsored by Sens. Scott Brown (R, Mass.), Mary Landrieu (D, La.) and Ron Wyden (D, Ore.) that would accomplish this change.

The Empowering States to Innovate Act would let states enact their own laws to provide health insurance in exchange for waivers from the mandates of the federal law, including the requirement that individuals obtain health coverage or pay a penalty. To qualify, however, a state reform proposal would need to cover as many people as the federal plan without costing taxpayers more money.

"I think that's a reasonable proposal," Obama said. "I support it. It will give you flexibility more quickly while still guaranteeing the American people reform. If your state can create a plan that covers as many people as affordably and comprehensively as the Affordable Care Act does -- without increasing the deficit -- you can implement that plan. And we'll work with you to do it. I've said before, I don't believe that any single party has a monopoly on good ideas."

Lack of enthusiasm from some

The president's endorsement gave the bipartisan bill "a booster shot," Wyden said. But governors opposed to the federal health reform law gave the Obama offering a tepid response. They signaled it would not be nearly enough to ease concerns from states over meeting tough coverage standards in a difficult economic climate.

"Certainly the proposal endorsed by President Obama is an encouraging step, but it's important to note that this measure would do nothing to address spiraling Medicaid costs, which are the biggest threat to budgets in states like Arizona," said Matthew Benson, a spokesman for Arizona Gov. Jan Brewer. "This proposal would not loosen federal mandates governing health benefits. Likewise, it would not give states freedom from federal Medicaid regulations, nor the flexibility states require to manage their Medicaid programs during times of fiscal duress."

Some observers said the offer of more flexibility doesn't mean real flexibility at all, as states still would be required to offer insurance to the same number of people at the same level of coverage without increasing budget deficits. That is an unrealistic expectation of any state, said Grace-Marie Turner, president of the Galen Institute, a Washington, D.C.-based think tank devoted to free-market health solutions.

The AMA and other groups in the Health Care and You Coalition have launched a website explaining what the health system reform law means for consumers: www.healthcareandyou.org

"The administration won't be able to meet those goals with Obamacare, and there is no way the states could, either," Turner said. "So it is nothing more than an empty speech."

But some governors applauded Obama's support for an early opt-out and indicated that their states were up to the challenge. This year, Vermont Gov. Peter Shumlin proposed a single-payer health system for the state that would take effect in 2014. His bill is working its way through the Vermont Legislature. "I think this is an excellent example of how we can work together to control skyrocketing health care costs and implement meaningful health care reform as soon as possible," Shumlin said.

Massachusetts Medical Society President Alice Tolbert Coombs, MD, noted that her state has a reform plan covering the majority of state residents. "We already have a robust program."

Some waivers already granted

Some states and insurance plans already sought and received relief from one of the law's early mandates that took effect late last year.

The Dept. of Health and Human Services said that by late January, 733 entities had obtained temporary waivers from regulation of annual insurance benefit levels, and the list was continuing to grow. Among those obtaining waivers are four states -- Massachusetts, New Jersey, Ohio and Tennessee -- that sought regulatory relief for their state-mandated insurance policies.

The reform law establishes a floor for annual coverage of hospital, physician and pharmacy benefits. Plans with coverage start dates between Sept. 23, 2010, and Sept. 22, 2011, cannot set a benefits cap below $750,000. The floor will rise to $1.25 million for plans with start dates on or after Sept. 23, and to $2 million for plans starting from Sept. 23, 2012, through 2013. Limits on coverage of essential benefits will be prohibited beginning in January 2014.

Some reform law opponents said the sheer number of waivers granted so far are less a sign of the White House's flexibility and more an indication of the statute's inherent flaws.

"What does it say about the feasibility of a law when you need to exempt over 900 health plans -- or 2.5 million people -- from complying with it?" Rep. Fred Upton (R, Mich.) asked in his opening remarks at a Feb. 16 congressional hearing on the waivers.

The waivers are granted by the federal Center for Consumer Information & Insurance Oversight. Steven Larsen, the center's director, told lawmakers that most group health plans offer more generous coverage than the minimum allowed. Plans that obtained waivers provide insurance to only about 1.5% of people with employer-sponsored health coverage.

Implementation can proceed

Meanwhile, a federal judge in Florida who ruled the health reform law invalid said the federal government could continue implementing the law while questions about its constitutionality are debated in higher courts.

Judge Roger Vinson indicated March 2 that he would stay his Jan. 31 ruling that declared the law invalid, based on the individual mandate being unconstitutional, provided the administration file a formal appeal within one week. The Dept. of Justice filed its appeal on March 8.

"The sooner this issue is finally decided by the Supreme Court, the better off the entire nation will be," Vinson wrote in the document announcing the stay. He chided the government for waiting so long to lodge its appeal.

The White House had asked Vinson to clarify his ruling because the governors of some states said it meant they could cease their work to prepare for the implementation of the health reform law's major provisions, which take effect in 2014.