New GOP governors will affect health law

Republicans recaptured control of the House and made gains in the Senate on Tuesday night, sparking celebrations across the country.
By N.C. Aizenman
Washington Post Staff Writer
Tuesday, November 9, 2010; 12:52 AM

Republicans' consolidation of power in state capitols is likely to expand the number of states that employ a far more limited, free-market-oriented approach to implementing the nation's new health-care law than the robust regulatory model favored by its supporters.

Although the law is a federal statute, it tasks states with administering many of its most important provisions and grants them considerable leeway.

It is up to states to run markets, known as "exchanges," through which individuals and small businesses will be able to buy health insurance plans, often with federal subsidies, beginning in 2014. States will also oversee a mostly federally funded expansion of Medicaid to cover a far larger share of the poor.

Many incoming Republican governors made their antipathy to the law a plank of their campaigns. Tennessee Gov.-elect Bill Haslam denounced it as "an intolerable expansion of federal power." Wyoming Gov.-elect Matt Mead promised to join 21 states contesting its constitutionality in federal courts. And Maine, one of the first states to set up a task force to implement the law, will now be led by Paul LePage, a tea-party favorite who vowed to work against the legislation and predicted that voters would soon see headlines about him telling President Obama to "go to hell."

Such state leaders cannot completely block implementation of the law: If they are unwilling or deemed unready to run an exchange by 2014, the legislation empowers the federal government to step in with its own version. But the law does grant states a fair amount of discretion.

The result, analysts say, is that two models are likely to appear: Democratic governors and legislatures are likely to emphasize vigorous regulation and government oversight, while Republican state leaders are likely to put greater stock in privatization and other free-market approaches.

"The character of what emerges in each state will in large measure be driven by the philosophy of its governor," said Michael Leavitt, a former governor of Utah who served as secretary of Health and Human Services under President George W. Bush and who many conservative state leaders are now consulting.

Indeed, for all the fanfare attending the GOP's retaking of the House in last week's midterm elections, the party's victories at the state level are likely to have far more immediate practical consequences for the health-care law. With a net gain of at least eight gubernatorial seats and even more state legislatures, Republicans now control both branches of government in at least 20 states, compared with nine before the elections. And although chances are slim that House Republicans can use their new power to derail the legislation as long as Obama remains in office, governors and state lawmakers can influence its shape.

For example, although the law sets baseline standards such as essential benefits that insurers must offer if they wish to sell plans on the exchanges, states can add any mandates. A state could require insurers to prove that their policies are achieving certain outcomes - high child immunization rates, for instance. Or it could allow virtually all comers into its exchange in hopes that doing so would keep costs lower.

States will also have to decide whether they will run the exchanges or outsource their oversight to a private entity.

Similarly, although the law requires states to review "unreasonable" premium increases, it will largely be up to each state to determine what that review process entails. States could require insurers to offer detailed justification and seek preauthorization for any rate increases. Or they could ignore all but the most substantial rate increases, and even then, simply require that insurers file reports detailing their reasons for the rise.

State approaches to insurance regulation differ substantially, and the range was evident in the variations among recent state applications for federal grant money that the law provides to help them develop their new rate review processes. Five states - Alaska, Georgia, Iowa, Minnesota and Wyoming - did not even request funding.

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