In GOP-led states, health-care law inspires attacks and accommodations

By N.C. Aizenman and Amy Goldstein
Washington Post Staff Writers
Monday, February 21, 2011; 10:14 PM

With battles over the president's signature health legislation underway in the courts and on Capitol Hill, a third line of attack is forming in the states: Practically every week, a Republican governor or lawmaker announces a new effort to kill the health-care law or undercut its implementation.

Some have returned federal funding to prepare for the rollout and halted early planning work. But others are moving forward even as they pursue efforts to overturn the law.

GOP-led states are staking out different approaches because, for all the tough talk of opposing the law, their room to maneuver is finite.

They are attacking a law whose major provisions do not take effect until 2014, which means that for now, there is not much to obstruct.

Meanwhile, because significant Republican wins in November 2012 could lead to amendments or outright repeal, GOP governors have an interest in trying to undermine voters' confidence in the law by vowing to oppose it.

Yet if the law survives the aftermath of the 2012 election - and the court challenges - the governors will have an incentive to implement it themselves. That's because the law empowers the federal government to step in where states fail to take the lead.

For instance, Republican governors would face a choice between letting a Democratic administration establish a potentially more regulated version of state-based private insurance markets known as "exchanges" or designing their own.

And if these governors don't start laying the groundwork soon - deciding what new rules to issue and agencies to revamp - they risk missing the Jan. 1, 2013, deadline by which states must prove they have made enough progress to avoid a federal takeover.

So it's not inconsistent for many Republican governors to be simultaneously opposing the law and instructing state agencies to begin setting its provisions in motion, said Alan Weil, executive director of the National Academy for State Health Policy.

"They are just expressing the two parts of their job," he said. "Governors are both political leaders who advocate for positions and the chief executive . . . who [has] to make things work."

The dynamic helps explain the range of tactics GOP state leaders are employing:

Declared dead

After a federal judge in Florida not only struck down the health-care law but suggested that his judgment was the "functional equivalent of an injunction," officials in three of the 26 states party to the suit - Alaska, Florida and Wisconsin - declared the law "dead."

The Obama administration has asked the judge to clarify whether the decision means it must request a stay permitting the law to remain in effect pending appeals. If so, the government is virtually guaranteed to get one given that two other federal judges have already upheld the law, and a third struck only a portion of it.

Watch the money

Nonetheless, the governors' mutinous stance kicked off speculation that they were about to launch a full rollback of the law. In practice, their actions have been more nuanced.

Last week, Alaska Gov. Sean Parnell (R) announced that he would not meet the deadline to apply for a $1 million federal grant to help states plan their exchanges, because doing so would "violate the court's ruling." Yet well before the Florida court weighed in, Parnell's intention to pass up the money was clear, since it had been available for months. Meanwhile, Parnell has not returned the more than $15 million in federal funds Alaska has received through other provisions of the law.

Wisconsin, whose new Republican governor, Scott Walker, replaced a Democrat, recently returned a $637,114 "consumer assistance" grant the law provides. Yet last week the state accepted $37.8 million to help it design the technology infrastructure needed to operate an exchange.

Florida Gov. Rick Scott (R) decided to return a $1 million exchange planning grant and an additional $1 million to pay for a system to help consumers track insurance rates. But otherwise, the only work his administration appears to have halted are "rule workshops" to consider changes in Medicare services.

Slow going

Rather than suspending implementation, the actual Republican strategy in these and and other states is more like decelerating it.

Experts say it's impossible to predict whether those now taking the slower route will really end up obstructing implementation.

"If you take a yield sign or a bump in the road . . . as a bigger statement than it really is, you can reach the wrong conclusions," Weil said.

Flex appeal

Go ahead. Make our day. That was the undertone of a letter that 21 Republican governors sent Secretary of Health and Human Services Kathleen Sebelius earlier this month. Unless she allows states more flexibility in designing the exchanges, the governors wrote, "HHS should begin making plans to run exchanges under its own auspices."

As Indiana Gov. Mitch Daniels put it in an opinion piece in the Wall Street Journal the same day: "If there's to be a train wreck, we governors would rather be spectators than conductors."

But it's not clear that the administration would have the authority to waive one of the limitations Republicans complain about most: the requirement that plans sold on exchanges offer a minimum package of "essential benefits." (Critics worry that the administration could make the package too generous, increasing the cost of insurance to unsustainable levels.)

And Sebelius countered point by point that the law already gives states the flexibility they seek.

Virginia's example

No governor better embodies the strategy of opposing the law in court while simultaneously planning for it to take effect than Virginia Gov. Robert F. McDonnell (R). In August, he created an advisory council to look into aligning Virginia law with the statute's earliest requirements. The council has issued 28 detailed recommendations, including several that have been translated into legislation or incorporated into the governor's budget.

Virginia has also used its exchange-planning grant to hire contractors to explore questions such as how many people might buy coverage through an exchange. The General Assembly is considering a bill that would give state agencies permission to plan for an exchange quickly enough to present state leaders options by October. And the state has already begun preparing for the law's coming expansion of Medicaid, focusing on how it will integrate its current rules with the new requirements.

McDonnell "realized early on the lawsuit might be a long process," said Cindi Jones, a health policy expert advising the governor. In the meantime, the statute "is the law of the land, so he was committed to doing what needed to be done."

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