The language of the bill provides them with a nearly unlimited range of policy options to use the money in the service of providing health care access, and no templates or fallback options.
Republican governors from 15 states have endorsed the bill, saying that “adequately funded, flexible block grants to the states are the last, best hope to finally repeal and replace Obamacare.”
States could use the money in any number of ways: state insurance programs, subsidies for private insurance, direct payments to health providers, high-risk pools or more. They would be free to preserve the central consumer protections created by Obamacare, or to decide to allow insurers to limit benefits or charge higher prices to sicker customers than healthier ones.
The challenges would fall into two major categories. First, states would need to make political choices about what they want their system to look like. Next, they would need to submit applications, hire contractors and build new systems to run them. Neither would be easy.
The bill would make health care an active, high-stakes political debate in all 50 states. Under Obamacare, states had limited, rather binary policy choices, and even those were hard for state governments to make quickly. States had to decide whether to run their own insurance marketplaces or to let the federal government do it for them. After a Supreme Court ruling in 2012, they had a choice about whether to expand their Medicaid programs to cover more childless adults, or to stick with their prior programs. Many states took longer than two years to answer even those comparatively simple questions.
Consider, for example, a state like Virginia, where a Democrat sits in the governor’s office but Republicans run the legislature. Political consensus might prove elusive. Fights could erupt even among more politically homogeneous states that support Obamacare. One house of the California legislature recently voted to adopt a single-payer health care system. The flexibility presented by the bill might open a heated debate about whether to adopt such an approach — or build something more like the Affordable Care Act, which is currently working well there. There are also the challenges of state legislative calendars: Texas’ legislature, for example, is not scheduled to convene until 2019.
“In some ways, a clean slate is much more complicated than very discrete decisions,” said Larry Levitt, an executive vice president at the Kaiser Family Foundation, a nonpartisan health research group. Mr. Levitt described the challenges facing states under this legislation as “formidable.”
In contrast with an earlier bill from Mr. Cassidy, which offered a default option for uncertain states, there is no backup plan in the bill. The Obamacare coverage programs would disappear everywhere in 2020, and any state unable to make a plan and submit an application would be ineligible for the new grant funding. If a state succeeds in obtaining the funding but doesn’t have a functioning new system on Jan. 1, 2020, consumers and markets would be thrown into chaos.
Under the bill’s block grant formula, Mississippi would be one of the biggest winners, eligible for substantially more health care money than it gets now. Still, Mike Chaney, the state’s insurance commissioner, said that he was wary about the change. “Which evil do you like better, the one you know or the one you don’t know?” Mr. Chaney said. “There are better ways to do this.”
Once states choose a policy approach, they would need to bring it to life. If they adopt a government-run approach, in which people can enroll in a single public health plan, they will need to develop the parameters for that program and put it out to bid. If they select something similar to Obamacare — some sort of insurance market with income-based subsidies — they will need technology systems that allow them to verify people’s eligibility and income, and link state assistance with their insurance purchases.
Most states have lengthy contracting processes, in which they must request proposals and review multiple bids before signing up vendors. Those deals would need to be in place before any software building begins. The Obama administration had nearly four years to develop and build its enrollment system, HealthCare.gov, which barely functioned at the outset.
Peter Lee, the executive director of the California marketplace, Covered California, which is considered one of the country’s most successful, said that his system was barely finished in time, and he had the ability to call up local technology C.E.O.s for advice.
Andy Slavitt, who joined the Obama administration in 2014 to help rebuild the ailing HealthCare.gov, and is strongly opposed to the Republican bill, said it would be close to impossible for most states to build meaningful systems for providing health insurance on such a timeline. “This is a fantasy document developed without the benefit of talking to people who have actually had to operationalize these things before,” he said.
Passage of the bill would set off a state rush for help from the limited group of contractors who have built big systems. Mike Leavitt, a Republican who was Secretary of Health and Human Services under George W. Bush, and a governor of Utah, now runs a consulting firm that helps states build and manage exchanges. He said he supported the general idea of giving states more power.
He was optimistic that some states could adopt out-of-the-box systems within two years, but probably not all. “There are different levels of complexity involved in states, and there’s different levels of capacity, and there’s different levels of experience,” he said.
Many experts I spoke with were confident that most states would find some way to get the federal money, given how big the stakes were. They were less sure about whether states would be able to use it in a way that would provide health coverage quickly to the people currently served by Obamacare.
“The metaphor I think about is it’s saying, ‘We’re going to continue having a freeway full of fast-moving cars, but we’re going to remove the lane line and the speed limits and say we hope things work out,’ ” Mr. Lee said.
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