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Report: Only 11 States and District of Columbia Have Taken Action to Implement ACA’s 2014 Health Insurance Reforms

State action needed or federal government will step in (Feb. 1)

Only 11 states and the District of Columbia have passed laws or issued regulations to implement the Affordable Care Act’s major health insurance market reforms that go into effect in 2014, according to a new Commonwealth Fund report. Thirty-nine states have not yet taken action to implement these requirements, potentially limiting their ability to fully enforce the new reforms, which include bans on denying people health insurance due to pre-existing conditions, a minimum benefit standard, and limits on out-of-pocket costs.

According to the report, states that do not pass new legislation or issue new regulations may lack the authority and tools necessary to ensure that health insurance companies in their states are complying with the new rules, unless regulators have existing authority to enforce federal law. If states fail to ensure compliance with the rules, responsibility for enforcement, the authors say, could default to the federal government.

The new report is based on a review of new state laws, regulations, and subregulatory guidance by researchers at Georgetown University.

“The reforms to health insurance under the Affordable Care Act are a huge boon to consumers, who for decades have been forced to buy health insurance in a marketplace where insurers can discriminate against anyone who is sick,” said Commonwealth Fund vice president Sara Collins. “This all changes in 2014. But because insurance regulation falls to the states, states need to take action to make sure they can enforce the law and ensure their residents can fully benefit from it.”

The health insurance market reforms that begin in 2014 apply to plans both inside and outside the state health-insurance marketplaces and include:

  • Guaranteed issue: Requires insurers to accept every individual and employer that applies for coverage.
  • Ban on waiting periods: Employers cannot impose waiting periods longer than 90 days before an employee can be eligible for coverage.
  • Rating requirements: Insurers are restricted from using health status, gender, and other factors in setting premiums.
  • Ban on pre-existing condition exclusions: Insurers cannot exclude or limit coverage for people with preexisting health problems.
  • Essential health benefits: Requires insurers to cover a comprehensive set of health benefits.
  • Out-of-pocket cost limits: Holds out-of-pocket costs to the level established for high-deductible health plans that qualify for health savings accounts.
  • Actuarial value: Requires insurers to cover at least 60% of total costs under each plan and to sell plans that meet new benefit tiers based on average costs covered.

According to the report, future state action is critical. Without new legislation, regulators in at least 22 states would be limited in their ability to use all of the tools they need to protect consumers under the Affordable Care Act. The authors say that while states can use existing authority to promote compliance with many of the law’s requirements, “questions remain about how effectively states can enforce the 2014 market reforms without new or expanded legal authority.”

Source: Commonwealth Fund; February 1, 2013.

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