Views of Governors and Insurance Commissioners on ACA Repeal and Changes to Medicaid: Responses to a Congressional Request for State Input on Health Reform

This brief summarizes publicly available responses from governors and insurance commissioners in 35 states, including DC, to a request from members in the House of Representatives for state input on health care reform. Among the 35 state responses, 18 had a Republican governor at the time of the response, while 17 had a Democratic governor. The responses provide insight into the views of governors and insurance commissioners on repeal and replacement of the Affordable Care Act (ACA) and the changes Congress is considering making to the financing and structure of Medicaid. The findings do not reflect views of all states and represent general themes of perspectives of governors and insurance commissioners. Key findings include:

Respondents have mixed views on the ACA and potential repeal and replacement of the ACA. While some state leaders are in clear support of the ACA or ACA repeal, others have a more mixed perspective, recognizing both benefits of the ACA and opportunities for continued improvement. Respondents point to several key benefits of the ACA, including coverage gains, improved health and health care, and economic benefits. Key areas of concern about the ACA include the balance of federal and state authority, instability in the individual market and rising premiums, and sustainability of Medicaid enrollment growth.

Most respondents (29 of 35) expressed cautions or concerns about repeal, which are shared among both Republicans and Democrats and those who oppose and support repeal. The most frequently cited concerns are the potential for coverage losses, increased market instability, and loss of federal funding and increased costs for states. Many respondents who support repeal but still express concerns suggest it is important for replacement to occur at the same time as repeal and for there to be adequate transition time to implement changes. They also stressed the importance of maintaining some provisions during an interim or transitionary period to prevent against market instability and coverage losses.

Most respondents from Democratic states highlighted concerns about capped financing for Medicaid; 6 of the 18 Republican respondents cited general support for capped financing, subject to key caveats. Key concerns respondents cited about a capped financing structure included it shifting risks and costs to states; leading states to make difficult choices about program cutbacks in eligibility, benefits, and/or provider payments; and locking historic program choices and state variation in place. While 6 respondents from Republican-led states were generally supportive of a capped structure, they outlined suggestions for how the cap should be structured that are not consistent with previous and emerging federal cap proposals. For example, some suggested that the cap be responsive to changing economic conditions and/or be reviewed annually. Moreover, these respondents generally did not tie capped financing to a reduction in federal funds.

Many of the respondents from Republican states (11 of 18) cited interest in increased state flexibility in Medicaid, while most respondents from Democratic states did not provide specific comments on flexibility. However, across states, some respondents asserted that increased flexibility should not be tied to reductions in federal financing and/or felt that states already had sufficient flexibility for innovation within existing program rules. The scope of increased flexibility respondents called for varied widely. In general, respondents wanted greater flexibility to charge enrollees premiums and cost sharing, to provide more limited benefits, and to reduce or limit eligibility and enrollment. Some also indicated interest in increased flexibility related to provider payments and delivery systems, as well as other areas, such as care and payment for dual-eligible beneficiaries and prescription drug coverage. Such changes to federal standards and state options affect the extent of accountability for the federal investment in the program and the scope of nationwide protections available for enrollees.

Nearly all respondents from states with a Republican governor (16 of 18), called for returning authority to the states to regulate insurance markets. In contrast, most Democratic respondents supported the insurance market changes made by the ACA and cautioned that altering these rules could lead to market instability and loss of coverage. In addition to enhanced regulatory authority in general, some respondents called for specific changes to essential benefit requirements and premium rating rules. Among the 12 respondents who provided comments on the individual mandate, most of the 10 respondents who opposed the mandate suggested it be replaced with continuous coverage provisions to protect against adverse selection. Slightly less than half of state respondents (15 of the 35) wanted the federal government to maintain financial assistance for consumers either through the transition to a replacement plan or as part of a replacement plan. While many Democratic respondents did not specifically call for maintaining financial assistance in a replacement plan, they noted the importance of tax credits to the coverage gains achieved under the ACA.

Few respondents expressed interest in provisions to allow the sale of insurance across state lines, expand the use of Health Savings Accounts (HSAs), or create state high-risk pools, which are key elements of Republican ACA replacement proposals. Most respondents did not provide comments on the sale of insurance across state lines and those that did had mixed views. Five suggested that this practice would increase competition in the markets and expand consumer choice, while three expressed concerns it would undermine their regulatory authority. Only four respondents suggested expanding the use of HSAs, although it was not clear if they believed HSAs should be used in lieu of or in addition to tax credits. Twelve respondents indicated they would consider setting up a high-risk pool, but nearly all of these respondents noted that the pools would need to be adequately funded at the federal level.