Experts: Decisions by states on healthcare offer insight into 2012

States that have
chosen to allow the federal government to operate a high-risk pool of
uninsured people are the ones most likely to punt again when most of the coverage benefits go into effect years down the road.

While it’s too early to know with any certainty what individual
states will
end up deciding two years from now, especially when the outcome of
legal challenges to the law will still playing out, experts say it’s
unlikely that the politics of healthcare reform will dramatically
change anytime soon.

{mosads}The insurance exchanges to cover millions of
people are scheduled to be up and running
in 2014, but states must decide as early as 2012 whether to operate
them or
have the Department of Health and Human Services (HHS) take over,
similarly to what
happened with the high-risk pools for sick people who can’t find
affordable
coverage. That latter decision has attracted charges of partisan
politics. With only three exceptions, the 19 states that have declined
to run their own
show are run by Republican governors.

Those states “have self-selected themselves as the states
that are clearly the most likely to choose not to run their own exchange,” said
John McDonough, a Democrat and senior advisor to the Senate health committee
during the health reform debate who before that helped shape Massachusetts’
health overhaul.

“I would say the most important demographic factor
[explaining governors’ decision] is a color: red,” added McDonough, now a fellow
at Hunter College in Manhattan. “It would be considered potentially unwise to
be perceived by your electorate to be collaborating with the Obama
administration on this.”

The
2010 elections will be seen at least to some degree, as a referendum on
the president’s health reform law. Some congressional Republicans have
vowed not to fund healthcare reform if they take control of either the
House or Senate early next year. And with potential GOP presidential
candidates calling for the law to be repealed, the debate is expected
to be a top issue in President Barack Obama’s anticipated 2012
reelection campaign. Therefore, the coverage decisions by states in
2012 will be viewed by many through a political prism.

Edmund Haislmaier, a senior research fellow for health
policy studies with the conservative Heritage Foundation, said some Republican
states may decide to gamble that health reform will eventually “blow up, get
repealed, or both.”

Some may decide, “I‘m just going to do nothing – it’s [HHS’
mess], let them deal with it.”

The states that have opted to let
HHS run a high-risk pool for them are: Alabama, Arizona, Delaware, Florida,
Georgia, Hawaii, Idaho, Indiana, Louisiana, Minnesota, Mississippi, Nebraska,
Nevada, North Dakota, South Carolina, Tennessee, Texas, Virginia and Wyoming.
Only three – Delaware, Tennessee and Wyoming – are led by Democrats. Utah and
Rhode Island will make their final determinations later.

Governors who let HHS administer the program have
justified their decisions by claiming the $5 billion set aside by the
health reform law will
run out before the program expires in 2014, at which point insurance
market
reforms will make high-risk pools unnecessary. That could have left
them having
to foot the bill for several years.

“Our decision regarding the high-risk pool was based only on
facts we had about the high-risk pool,” said Jane Jankowski, spokeswoman for Republican
Gov. Mitch Daniels of Indiana. “We’ll look at each decision separately. It’s
too early to know about the exchange. Much more information will be needed
before a decision is made.”

Still, politics will clearly factor into the exchange
decision – just as they did for high-risk pools. Of the 19 states, 14 – almost three-quarters
– have joined lawsuits questioning the health reform law’s constitutionality (Democratic-led
Delaware, Tennessee and Wyoming are the exceptions, along with Hawaii and
Mississippi).

Asked whether Nevada is leaning in any direction on the
insurance exchange issue, a spokesman for Republican Gov. Jim Gibbons simply
reiterated that “Gibbons has also taken steps to join [20] other states in the
upcoming lawsuit against the Reid/Pelosi/Obama nationalized healthcare law.
Gov. Gibbons believes the law tramples the U.S. Constitution.”

McDonough said some states might wait for the lawsuit to
play itself out first, and tone down their rhetoric if the courts rule for the
administration. He added that governors who nevertheless still want to leave
HHS in charge would probably run into opposition from their own insurance
commissioners.

“There will be a tension there,” McDonough said, “because
while states may not like the law it’s to a state’s advantage for states to run
it themselves.”

Haislmaier said he would advise states not to
allow HHS run the program but to instead get ahead of the federal
government and set
up their own exchanges before 2014 – even if they don’t meet the new
law’s
standards regarding the range of benefits offered or the plan designs.
If those
state solutions turn out to be popular, HHS would then be left with the
unpalatable choice of having to decide whether to challenge them.

“I think most states will want to do their own exchanges,”
he said. “There’s a whole movement that wants to take this in a totally
different direction.”

Kansas State Insurance Commissioner Sandy Praeger said that
in the end, states’ decision may well rest in the hands of HHS: If the
department is flexible enough in its guidance, even conservative states will
likely cooperate.

“I think most states will want to do their own exchanges
because it gives you an opportunity to manage the market themselves,” said
Praeger, a Republican who chairs the National Association of Insurance
Commissioners’ insurance committee.

“Unless rules as they come out are so onerous that states
want to wash their hands of it – and that’s always a possibility.”

Still, Praeger made clear, she’s encouraged by what she has
seen so far.