Success (And Failure) Of Reform Rests With The States

While I’ve been arguing that health reform may be invalidated by the states, over at Ezra Klein’s blog Suzy Khimm make the important point that success of reform will also depend on state action. Khimm points to Massachusetts’ and Maine’s recent efforts to protect consumers from premium rate hikes and argues that all states will be responsible for overseeing the new exchanges once reform is fully implemented. “Though there will be federal rules and regulations for the exchanges, each state is tasked with creating and administering them. So state officials — both elected and appointed — will be bearing a lot of responsibility for enacting reform and regulating the insurance market”:

Some states have already beefed up their oversight of the health-care system and insurance market, and the regulatory battles they’re facing portend the kind of challenges that officials will be facing on the state level.

In Massachusetts yesterday, the state’s Division of Insurance rejected “235 of 274 increases proposed by Massachusetts health insurers for small businesses and individuals … mark[ing] the first time state government in Massachusetts has used its authority to deny health premium increases,” the Boston Globe reports.

The ruling makes good on a promise made by Gov. Deval Patrick to turn down excessive price increases.

And in Maine, there’s an ongoing legal battle over a state insurance regulator’s decision to reject an insurance company’s request for a premium hike last year. Anthem Blue Cross and Blue Shield, which is part of WellPoint, argues that they needed the premium increase to turn a profit during the recession. Contesting the state ruling in court, Anthem maintains that the insurance regulator’s decision had “zeroed out its profit to keep customer rates down” in the individual market, according to the Wall Street Journal.

Khimm notes that “by leaving so much up to the states, the health law could end up creating a system in which there are significant disparities in health coverage and insurance regulation, at least partly depending on political will…reform-resistant state governments will have much opportunity for foot-dragging and spotty regulatory enforcement because of their new responsibilities under the health law.” I agree, and would only add that the states doing most of the dragging probably have the highest rate of uninsured. Their populations are suffering from the most pronounced health care crisis and have worse health conditions.


In this sense, the state-based exchange structure is most unjust: it disadvantages the the populations that need reform the most and I suspect that if the disparities become too pronounced, Congress may have to step in and inject some federal oversight.