Yesterday, we talked about the overview and analysis of the SCOTUS decision about the PPACA, and today, we’ll begin with talking about the implications for the states.

Lynn said that she wanted to build off of Stuart’s point about federalism, and discuss what’s going to happen at the state level. The state is going to have to decide whether to expand its Medicaid program, whether to do an exchange or not. States, like the federal government, also have an executive and legislative branch. The ACA requires the establishment of exchanges in each state, and if a state does not do it, there will be a federal exchange. Lynn said we’ve seen movement by the Obama administration for perhaps a hybrid exchange, where the feds come in where the states need extra capabilities. 

Lynn offered the deadlines for the various part of the program: 

  • November 16, 2012 is when exchange blueprints are due to HHS (this is significantly a few days after the next election). 
  • January 1, 2013 is the final date for CMS approval for the state exchange plans (as an aside, Lynn said that the Center for Consumer Information and Insurance Oversight, which she calls the new federal department of health insurance, is housed within the Centers for Medicare and Medicaid Services, and this January 1 date is when they must approve it).
  • October 1, 2013 is when open enrollment has to start if it’s going to be effective as of January 1, 2014.

Predictions for the States

Lynn began by asking Bill what he thinks the states will do, whether he believes every state will expand its Medicaid population and take advantage of the 100% and 90%  federal match?

Bill said that he thinks in time, all states will take the offer, which is a fairly generous one by the federal government. But he thinks there will be a few, at least initially, who will hold out and not take it. It’s hard to say which areas, perhaps the south and west, but he thinks that political pressure from within their states will eventually lead them to accept. 

He expects that there will be various insurgent battles to try to stop states from taking it, either from the state legislatures or by referendum, so we’ll have to wait and see. His guess is that the vast majority, 45-47 states, will adopt what is in the law, and accept the additional Medicaid. 

The Acceptance Process in the States

Lynn asked whether Bill sees a difference in regions as to the states’ attitudes about this, or how they go about making a decision. She wondered whether a governor can just do it by executive fiat, or whether they have to go through the state legislature. Would a state that has a balanced budget amendment require it to go through the state legislature or referendum in order to commit future generations to these types of expenditures at the state budget level? 

Bill answered that each state will have a different process. In the Northeast, many states will be able to have the governor just sign and accept it. This could be challenged at a later time by the state legislature, but eventually, those states will sign on. He considers the Northeast to be comprised of those states from New Jersey up, with the possible exception of New Hampshire. 

In terms of the West Coast (California, Oregon, Washington), Bill thought that they would accept it as well. He said that in the South (Alabama, Mississippi, maybe Texas), with the most uninsured currently residing, there might be the most difficulties. But he thinks the Midwest and others will take it. 

California and the West have a referendum system that will allow it to be challenged. Lynn clarified that he meant either way, and Bill agreed, saying that his expectation is that there will be referendums probably on the California ballot that will go both directions – one will be to take it, and one will be not to take it. These will be fought out in the election, and while his suspicion is that they will take it, no one can predict what will happen. 

Lynn commented that it’s interesting, because those familiar with the history of the state Medicaid program will remember that Arizona stayed out of the federal Medicaid program for many years, only entering in the early 1980’s, when they came in under a statewide waiver. So it isn’t always the case, though she knows the Obama administration is really hoping that every state will do it. Lynn then asked Mark for his thoughts. 

More Predictions for the States

Mark said that he sees a couple of dynamics playing out. The first is waiting to see whether there will be a material change in the Executive branch or the Senate, sufficient to undo the current Medicaid dynamic. Secondly, the states may wait to see if the Administration and the Democrats in the Senate maintain their current resistance to the drumbeat among the governors to change the Medicaid program into a block grant program. 

A third perspective is as we enter the legislative season, the lame duck and the new Congress, whether the pressure to score savings ends up producing a material change in Medicaid with respect to handling dual eligibilities. Mark might predict that some compromises in this area could indeed lead to block grants or something like them for the states. 

Mark said that no one is very happy with the status quo in terms of Medicaid expenditures from a cost/benefit to the beneficiaries perspective, so there might seem to be a perfect storm brewing for Medicaid change in an era of new post-elections fiscal responsibility. He predicts that there will be a new political dynamic, saying that we can remember back to when President Clinton unexpectedly led welfare reform. Perhaps we will see President Obama coming out to take the lead in a new Medicaid program, which would change a lot of these dynamics. 

State Mandates & Greater Flexibility

Lynn said to Stuart that there is a lot of confusion, because a lot if made about the fact that Massachusetts had a state mandate. She said that we might see more state mandates as a result of the implementation of the reform, and asked him to explain to the audience why states can do mandates more easily than the federal government. 

Stuart said that it’s because states aren’t bound by any limitations in the Commerce Clause. They’re allowed to act for the general welfare and they get to define it. He asked us to remember that the US Constitution doesn’t give the states any power or limit any power, except where the federal government law preempts the states, or is superior to the states. Therefore, the states have a great deal more flexibility to regulate than the federal government. 

Stuart said that the states will do a lot of things. He said that he’s sure the other panelists would agree with him when he says that between 20-30 states aren’t even close to being ready with regard to the exchanges. Similarly, there are all kinds of tax issues within the states, with regard to funding even a small part of the Medicaid expansion. Stuart would suggest, and invited the others to disagree with him, that whether it’s the Obama administration or a subsequent administration, there will be a great deal of flexibility in allowing the states to ease into the program. His personal guess is that the states will probably get an extra year with regard to the exchanges. Stuart asked Bill whether he would agree with that, and Bill did. 

He said he thinks there will be a lot of exceptions given to people in order to try to get them into the exchanges. Some states have already opted out, and he imagines that these states will stay opted out for the foreseeable future and the federal government will run the exchange. The question is will they do it as a state exchange, or will they do it in a more secularized fashion – we don’t know yet. 

Mark commented that it seems to him that that’s a harder question for red states – do they find the PPACA so abhorrent that they would pass up the opportunity to eventually have local control of the individual and small group markets, and the option to have local input into the determination of what a qualified health plan will be. He agrees that CMS is going to continue to signal a willingness to accommodate late arrivals and said that they’re finding money for planning purposes, even though it’s past the original planning grant deadlines. There may be a few that wait until after the election to opt in, and they have about ten days after the election to do so. But it would makes sense for even die-hard red states to see the election through, and then , if the President has been re-elected, to take that last clear chance to maintain local control. 

Mark also said that he expects stakeholders will be urging state’s insurance commissioners to play a role as delegated entities in the context of federally facilitated exchanges, where the states passed up the opportunity to run these exchanges directly. 

Lynn summed up this section by said that she thinks that those who have lived and breathed the Medicaid program for all of these years understand the two steps that they have to do when you have the federal government playing with the statutes, while at the same time, you have to keep an eye on your state legislature, your state agencies, your state governors, and those who are now part of this federal department of health insurance. 


Next week, we’ll dive into looking at the PPACA’s impact on the federal level! 

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Photo of Lindsay Griffiths Lindsay Griffiths

Lindsay Griffiths is the International Lawyers Network’s Executive Director. She is a dynamic, influential international executive and marketing thought leader with a passion for relationship development and authoring impactful content. Griffiths is a driven, strategic leader who implements creative initiatives to achieve the…

Lindsay Griffiths is the International Lawyers Network’s Executive Director. She is a dynamic, influential international executive and marketing thought leader with a passion for relationship development and authoring impactful content. Griffiths is a driven, strategic leader who implements creative initiatives to achieve the goals of a global professional services network. She manages all major aspects of the Network, including recruitment, member retention, and providing exceptional client service to an international membership base.

In her role as Executive Director, Griffiths manages a mix of international programs, engages a diverse global community, and develops an international membership base. She leads the development and successful implementation of major organizational initiatives, manages interpersonal relationships, and possesses executive presence with audiences of internal and external stakeholders. Griffiths excels at project management, organization, and planning, writes and speaks with influence and authority, and works independently while demonstrating flexibility in thinking, especially in challenging situations. She also adapts to diverse and dynamic environments with constant assessment and recalibration.

JD Supra Readers Choice Top Author 2019

In 2021, the ILN was honored as Global Law Firm Network of the Year by The Lawyer European Awards, and in 2016, 2017, and 2022, they were shortlisted as Global Law Firm Network of the Year. Since 2011, the Network has been listed as a Chambers & Partners Leading Law Firm Network, recently increasing this ranking to be included in the top two percent of law firm networks globally, as well as adding two regional rankings. She was awarded “Thought Leader of the Year” by the Legal Marketing Association’s New York chapter in 2014 for her substantive contributions to the industry and was included in Clio’s list of “34 People in Legal You Should Follow on Twitter.” She was also chosen for the American Bar Association Journal’s inaugural Web 100‘s Best Law Blogs, where judge Ivy Grey said “This blog is outstanding, thoughtful, and useful.” Ms. Griffiths was chosen as a Top Author by JD Supra in their 2019 Readers’ Choice Awards, for the level of engagement and visibility she attained with readers on the topic of marketing & business development. She has been the author of Zen & the Art of Legal Networking since February 2009.