Raymond Scheppach: States wll take back their ACA exchanges (eventually)

Raymond Scheppach, longtime director of the National Governors Association (1983-2011) and a former deputy CBO director, is an expert on the role of the states in the formulation and implementation of public policy.  Currently a professor at the University of Virginia, he recently served as project director for a report, Cracking the Code on Health Care Costs,  produced under the auspices of UVA's Miller Center by a State Health Care Cost Containment Commission co-chaired by Michael Leavitt, former Republican Governor of Utah and HHS Secretary under George W. Bush (interviewed here), and Bill Ritter, former Democratic governor of Colorado.

The report highlights the power of state governments to shape healthcare policy, given their roles administering Medicaid, state employee benefits, and now the health insurance marketplaces established by the Affordable Care Act.  It calls on states to set targets for health care spending; promote various forms of managed care, ACOs and alternatives to fee-for-service medicine in the programs it administers; and help consumers generate competition by reporting cost and quality information about health care providers and insurers.

I spoke to Dr. Scheppach, now a professor of public policy at UVA, about current and likely future state-level healthcare reform efforts.

Scheppach noted at the outset that  state governments administer or oversee health insurance for a large swath of the U.S. population  -- with more to come as the ACA exchanges and Medicaid expansion matures. "If you add it all together, in another year or two, there will be about 75 million people in Medicaid, another 3-5 million in state and local government employees' health plans, and then there's the exchanges." (CBO projections envision 25 million ACA exchange customers by 2018.)

Michael Leavitt on State-level healthcare reform

Beneath the furious passions aroused by the Affordable Care Act lurk broad areas of bipartisan consensus regarding healthcare reform in the United States. Lawmakers in both parties want to move payment for healthcare away from fee-for-service and toward managed care, "bundled" payment by the patient or treatment episode, and risk-based payment, in which providers are rewarded for keeping costs under target and penalized for exceeding it. Both parties also accept the premise that high deductibles and co-pays help control costs -- with lip service at least usually paid to giving patients viable choices by providing information about providers' pricing and quality.

The bipartisan zone is mapped out in a report produced under the auspices of the University of Virginia's Miller Center by a commission co-chaired by Michael Leavitt, former Republican Governor of Utah and Secretary of Health and Human Services under George W. Bush, and Bill Ritter, former Democratic governor of Colorado. Cracking the Code on Healthcare Costs, released in January 2014, focuses on the role of state governments in containing healthcare costs while improving delivery, emphasizing that states have powerful levers on both fronts.  Those levers include administration of Medicaid, state employee health programs, and the state health exchanges established by the ACA, as well as the state regulation of insurance mandated by US law and "state laws affecting market competition and consumer choice, such as antitrust enforcement and requirements for providers to report price and quality information."

The report's working assumption is that, Republican cries of "federal takeover of healthcare" notwithstanding, both the ACA and existing Medicaid rules afford governors and state legislators and administrators ample scope to shape the healthcare markets in their states. Key recommendations include setting annual overall state spending benchmarks, as Massachusetts has done; promoting "coordinated, risk-based care to the disabled and dual-eligible population" -- the most expensive Medicaid beneficiaries; and also promoting coordinated, risk-based plans in the ACA exchanges -- as well as pricing transparency and quality ratings for participating plans.

ACA is here to stay

Does the ACA significantly constrain state innovation, or encourage it? I spoke about current and potential state efforts to transform healthcare delivery with Michael Leavitt and with Professor Raymond Sheppach, project director for Cracking the Code, whose comments I'll relay in a followup post.