Report Suggests States May Lack Enforcement Authority Over Looming Affordable Care Act Provisions

A report from the Commonwealth Fund suggests that state lawmakers should act soon to ensure that state regulators have the requisite authority necessary to enforce the provisions of PPACA due to be implemented in 2014.
The report finds an "acute need" for state policymakers to act.
A report from a private health policy foundation, finds slow progress among the states in implementing the Patient Protection and Affordable Care Act (PPACA). The report suggests an "acute need" for a number of states to take legislative action in 2013 in order to prepare for the various changes due to be implemented in 2014 under PPACA.

The Commonwealth Fund, a private foundation that seeks to promote a better health care system and that supports independent research on health care issues, recently released a report entitled Implementing the Affordable Care Act: State Action on the 2014 Market Reforms.

According to the report, PPACA "significantly strengthens standards for private health insurance under federal law and protects consumers across the nation." PPACA also phases in "significant reforms designed to improve the accessibility, affordability, and adequacy of private health insurance," according to the report.
These reforms will phase in over time, with the most dramatic changes scheduled to take effect for health insurance plans or policy years beginning on or after January 1, 2014. These changes—known as the “2014 market reforms”—include guaranteed access to coverage, a ban on preexisting condition exclusions, restrictions on the use of health status and other factors when setting premium rates, and the coverage of a minimum set of essential health benefits, among other critical consumer protections.
If the states fail to substantially enforce PPACA, the federal regulators will step in.
Although PPACA is a federal law, insurance regulation has traditionally been the province of the individual state governments. PPACA shows the traditional state regulatory roll some deference in that it provides that the states have the primary responsibility to enforce PPACA. However, if the states fail to "substantially enforce" PPACA, the law provides that federal regulators will step in and undertake primary enforcement. According to the report, such federal enforcment "could subject insurers to significant fines for failure to comply with the law's requirements."

The Commonwealth Fund's report focused on seven (7) of the "most critical 2014 market reforms" and examined whether the various states employed the enforcement and rulemaking authority they were granted under PPACA to ensure compliance with the federal law. The analysis showed that only one (1) state – Connecticut – took new legislative or regulatory action on all of these critical 2014 market reforms, while another ten (10) states and the District of Columbia took action on at least one of the surveryed reforms. These ten (10) states included Arkansas, California, Maine, Maryland, New York, Oregon, Rhode Island, Utah, Vermont, and Washington.
The majority—39 states—have yet to take new legislative or regulatory action to implement the 2014 market reforms.
The analysis went further, examining whether new legislative or regulatory action was not taken by these thirty-nine (39) other states because those state regulators already had enough authority to enforce federal law "through, for example, a broad provision that allows the insurance department to enforce federal insurance protections."

11 states passed laws specifically authorizing regulatory action on the 2014 reforms.
The report found that eleven (11) states "passed new legislation that explicitly requires (or allows) state regulators to enforce or issue regulations regarding some or all of the 2014 market reforms." These states were Connecticut, Hawaii, Iowa, Maine, Maryland, New Hampshire, North Carolina, North Dakota, Oregon, Utah and Vermont.

Nevertheless, only eight (8) of the remaining states reported existing enforcement or rulemaking authority with respect to the surveyed market reforms.

Twenty-two states indicated, according to the report, that there "could be some limits on their authority" to enforce or regulate with respect to the 2014 market reforms. The report noted here that "state authority varied significantly." Additionally, another ten (10) states did not respond to the survey at all.
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. 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.
Ultimately, the Commonwealth Fund report emphasizes that, to ensure that state regulators have the requisite authority necessary to enforce the provisions of PPACA due to be implemented in 2014, state policyhmakers should take action during the 2013 state legislative sessions.

Read the full report:

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