Now that the Supreme Court has decided the health reform law and its key individual mandate to buy insurance is constitutional, there will be a rush by insurers and many states to catch up on implementation. But there is a long way to go, and there still will be pockets of resistance that could affect strategies of health insurers, according to experts interviewed by HRW immediately before and after the court’s June 28 ruling.

The high court’s ruling doesn’t change how Independence Blue Cross will implement the reform law, said the company’s president and CEO, Dan Hilferty, in a news conference following the decision. It instead just reinforces what the company has done, he asserted, adding that “our schedule is about meeting these deadlines” for the reform-law implementation.

“We will likely see some states start to rev up,” says Bruce Merlin Fried, a partner in the law firm SNR Denton LLP and formerly the health plan head in the Health Care Financing Administration (CMS’s predecessor) in the Clinton administration. He also tells HRW, however, that “states whose opposition [to the reform law] is mainly ideological will continue to resist,” preferring to wait until the November election results are in to take major steps.

“All of this happens while the clock is ticking” toward the January 2014 implementation of such major reform-law provisions as the health insurance exchanges, Fried notes. But he predicts that the federal government will be prepared to step in and make sure the exchanges start up on time if the states aren’t ready.

The National Association of Insurance Commissioners now expects that 26 states will be ready to start fully state-operated exchanges in January 2014, Kansas Insurance Commissioner Sandy Praeger (R), who chairs NAIC’s health insurance and managed care committee, said in response to an HRW question at the committee’s June 26 news conference in Washington, D.C. This means, noted North Dakota Insurance Commissioner and NAIC Vice President Adam Hamm (R) at the same event, that the states will need to be ready for exchange enrollment beginning in October 2013.

Moreover, Praeger noted, states that want to operate their own exchanges or participate in what HHS calls a State Partnership Exchange (SPE) must file a Declaration Letter and Exchange Application with HHS by this Nov. 16 (HRW 5/21/12, p. 1). She cautioned that states wanting to run an exchange need an elaborate IT system, and if a state hasn’t started on this yet, “It’s too late to do it for 2014.”

IT and “interface” issues are big in the drive for implementation, agreed Robert Laszewski, a former health insurance executive who now is president of Health Policy and Strategy Associates, LLC. Speaking with HRW about an hour after the Supreme Court rendered its decision, Laszewski said, “Many states used the [pending] Supreme Court opinion as an excuse not to go forward. That excuse now is over, but so are [most] state legislatures” for the year.

“States now are in a big hole,” and some may need special legislative sessions to dig out of it, he asserted. Indeed, Hamm said that is an option North Dakota will need to consider, since its legislature already defeated a bill to set up the state’s own exchange.

Feds Are Urged to Be More Transparent

Laszewski predicted June 28 that as many as 40 states may not be ready by October 2013 and said he doesn’t know if the federal government will be ready. It “hasn’t been transparent” about plans and progress on the exchanges, he told HRW. And now it will need to show insurers and states promptly how it will handle such aspects as eligibility determinations and how premiums in the exchanges will be divided between the subsidized individual and federal payments. “That system has never existed before,” and now must be established in each of the states, he said. “Where are they on that?”

Insurers are used to working quickly on establishing specific benefits to accommodate large new clients, so this aspect should not be much more complex in the exchanges, but eligibility determinations that involve getting data from the IRS are far more difficult, he added.

Remaining issues notwithstanding, there is a lot that is clear in the wake of the Supreme Court ruling, including most significantly that individuals generally will have to buy insurance or pay a tax for not doing so.

“The Supreme Court found common ground in the fact that the requirement to purchase insurance was really framed as a tax,” noted Dan Mendelson, CEO of consulting firm Avalere Health LLC and a former health budget overseer in the White House Office of Management and Budget. But the high court’s ruling on that and the other provisions may not be the end of the matter, since “there will be further threats to the law from Congress, and we will know in November how serious those threats will be,” he said.

But he maintained that health plans will have to go ahead and make decisions and design exchange products in this environment of uncertainty, especially since many states have made few implementation decisions themselves.

Laszewski agreed, saying, “For those of us in the health care industry, the law stands; get to work!”

View the Supreme Court opinions at http://www.supremecourt.gov/opinions/11pdf/11-393c3a2.pdf.

© 2012 by Atlantic Information Services, Inc. All Rights Reserved.

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