The Obama administration may need to add a new task to its health reform to-do list: Enforcing the health insurance regulations at the heart of the Affordable Care Act.
The health-care law will, in 2014, change the insurance industry in myriad ways. Some – like the end of preexisting conditions – are really big changes. Others are smaller, like disallowing waiting periods for employer-sponsored insurance and limits on how much insurers can charge their oldest (and likely sickest) patients.
While states have traditionally regulated insurance markets, only 19 have updated their laws to allow them to enforce these new requirements, according to a report out Friday from the Commonwealth Foundation. If states don’t move soon, it could have the federal government playing a far larger regulatory role than initially expected.
“We don’t know what capacity the federal government has to enforce these protections,” Georgetown’s Kevin Lucia, a co-author of the study, says. “One way or another this will be the law of the land. It’s really a question of are the states going to do the enforcement, and maintain their traditional role, or will the federal government need to step in.”
Lucia, alongside co-authors Katie Keith and Sabrina Corlette, surveyed states about the steps they’ve taken so far to beef up their regulatory authorities. They found that nearly two-dozen had passed new laws in this arena, allowing them to enforce the new insurance regulations.
But another 22 states responded that, if challenged, they likely would not have the legislative authority to implement the new Obamacare provisions.
“These findings suggest that many states may need to take action in 2013 to ensure that consumers receive the full benefits promised under the Affordable Care Act,” the report concludes. “Because states are expected to be the primary enforcers, most will need to implement the new protections so they are reflected in state law or—at a minimum—give the insurance department the authority to enforce and write new rules on the 2014 market reforms.”
If a state does not have authority to enforce the Affordable Care Act, that doesn’t mean it becomes null and void: Rather, the enforcement authorities then fall to the federal government.
“It’s a question of both capacity and complexity, whether they have an appreciation for the nuances of each state market,” lead study author Katie Keith, also at Georgetown, says.
This wouldn’t be totally unfamiliar territory for the federal government: When it implemented the Health Insurance Portability and Accountability Act in 1996. That law gave greater protections to employer-sponsored insurance subscribers and had states as the first line of enforcement defense.
When some states did not take on the enforcement activities, the federal government found itself “regulating private health insurance plans [which] was a new and initially unanticipated responsibility,” according to a 2000 GAO report.
A federal review in 2000 found that the the federal government would need to take over enforcement powers in five states that had failed to move forward: Colorado, Delaware, Massachusetts, Missouri and Wisconsin.
That meant that, in a state like Missouri, it was up to the federal government to figure out whether local health plans were in compliance with the new regulations. In 1998, it had 39 staff members dedicated to HIPAA enforcement, according to a GAO report in 2001. That number fell to 16 by 2001, as states passed legislation to reclaim their enforcement powers.
States still have some time to come into compliance with the federal law. Keith has seen conforming legislation introduced in Oklahoma and Virginia, both times by Republican legislators.
“I don’t want to suggest there will be a ton of compliance issues,” she says. “What might happen, is if there’s pushback and a state doesn’t have explicit authority, their hands might be tied.”
That could mean the federal government stepping in – and needing to build up the capacity to do so across the country.