Shortly after the election, Congressional leaders, led by Majority Leader Kevin McCarthy, sent a letter to state governors and insurance commissioners, asking for their input on legislation to replace the Affordable Care Act (ACA). States’ responses were due back in early January. Some states may have chosen not to respond; others did not make their response public. However, we were able to track down letters from 34 states, 19 from states with Republican governors and 14 from states and the District of Columbia with Democratic leadership. Some states sent two letters – one from their Governor and one from their insurance commissioner.

The responses from states with Democratic governors were just as you would expect. They generally opposed repealing the ACA and listed the many ways in which the law has improved access to coverage and financial security for families in their states.

The responses from Republican state leaders were more varied. Some of course parroted calls from Republican leaders in Congress to immediately repeal the ACA, citing high premiums, reduced competition and less choice for their residents. But others urged caution, and asked Congress to avoid causing market disruption and the loss of coverage for people in their state. Utah’s governor urged Congress to act “carefully” and “methodically.” Arizona’s Douglas Ducey wrote: “I don’t want to see any Arizonans have the rug pulled out from under them.” Alabama’s governor warned that “repealing the ACA without a clear replacement could raise concerns among insurers nationwide, and cause more to withdraw from the market,” while North Dakota Governor Burgum called on Congress to, in the short term focus on “providing certainty to all” in order to avoid “unnecessary market disruption.”

Congressional leaders asked states to respond to nine specific questions. Some states provided detailed responses to each question, others provided more general statements. We summarize below the diverse responses from states led by Republican governors.

Question 1: What changes should Congress consider to grant more flexibility to states to provide insurance options that expand choices and lower premiums?

Not surprisingly, responses from Republican governors and insurance commissioners asked Congress to give states greater authority to regulate health insurance products. Most focused in particular on benefit design, asking for a rollback of the ACA’s essential health benefit requirement and allowing states to determine what insurers should cover. These states also want greater autonomy over premium rate-setting, such as the ability to allow insurers to set premiums based on health status. Others, such as Nevada, Utah, North Dakota, and Tennessee asked Congress to end federal interference with the plan and rate review process and timeline.

Question 2: What legislative and regulatory reforms should Congress and the incoming administration consider to stabilize your individual, small group, and large group health insurance markets?

Republican governors had a wide range of responses to this question. Several, such as Arizona, Illinois, Massachusetts, New Hampshire, Ohio and Utah, focused on the substance and timeline of Congressional action to repeal and replace the ACA. They urged Congress not to take hasty or “incomplete” action, and to provide “certainty” for insurers. Not surprisingly, several state leaders supported repeal of the ACA’s individual mandate, but noted that it would need to be replaced with some sort of similar incentive, such as a late enrollment penalty or continuous coverage requirement.

A few responses, such as Kentucky, Massachusetts, Nevada, and Oklahoma called for continuing or re-establishing the risk-mitigation programs under the ACA. For example, Oklahoma’s insurance commissioner urged Congress to “fulfill the payment obligations made under the ACA Risk Corridor programs.” Many highlighted the need to limit the ability of people to enroll in plans through special enrollment periods (SEPs), shorten the 90-day grace period for failure to pay premiums, and curtail the steering of high-need individuals from Medicaid and Medicare to private plans.

Question 3: What are key administrative, regulatory, or legislative changes you believe would help you reduce costs and improve health outcomes in your Medicaid program, while still delivering high quality care for the most vulnerable?

Again, not surprisingly, most Republican state leaders called for greater state autonomy in the operation of their Medicaid programs. But beyond that call, there was considerable diversity among their responses. Some, such as Wisconsin and Kentucky, asked Congress to shift Medicaid from an entitlement program to a block grant and allow them to require beneficiaries to shoulder more of their health care costs. Governor Ducey of Arizona, however, stated that shifting Medicaid funding to a block grant or per capita limit would be “the largest transfer of risk ever from the federal government to the states.” Some states, such as Ohio and Illinois, even noted the “positive effects” of the ACA’s Medicaid expansion and urged Congress to protect this vulnerable population.

Question 4: What can Congress do to preserve employer-sponsored insurance coverage and reduce costs for people who get insurance through their jobs?

Republican state leaders had a wide range of responses to this question. Several focused on the market for small business insurance, asking that insurers be given more flexibility to design small-group health benefits. Arizona, Nevada, and Tennessee urged Congress not to impose new taxes on employer-based plans, such as by capping the federal tax exclusion for premiums or allowing the ACA’s Cadillac tax to be implemented. Utah’s officials observed that small employers’ ability to self-fund their plans has de-stabilized the small-group market in their state.

Question 5: What key long-term reforms would improve affordability for patients?

Several Republican leaders responded to this question with ideas that may have bipartisan appeal. For example, Alabama and Ohio called on Congress to address the underlying drivers of cost growth in health care and pursue alternatives to our fee-for-service method of paying for services. Nevada and Tennessee called for efforts to reduce high prescription drug prices (Tennessee also raised concerns about the lack of regulation of pricing for air ambulance services). New Hampshire and Utah highlighted the value of their all-payer claims databases and asked Congress to require self-funded employer plans to contribute claims data. Many called for greater transparency of the pricing for health care goods and services.

On the other hand, proposals from several Republican state leaders to require consumers to pay more out-of-pocket (euphemistically referred to as “consumer-driven” health plans) are less likely to gain bipartisan approval.

Question 6: Does your state currently have or plan to enact authority to utilize a Section 1332 Waivers [sic] for State Innovation beginning January 1, 2017?

Most Republican responses suggested that they do not intend to apply for a Section 1332 waiver unless and until the current limits on their flexibility are lifted. Several states also want the new Trump Administration to allow them to submit a coordinated 1332 and 1115 waiver application.

Question 7: As part of returning more choice, control and access to the states and your constituents, would your state pursue the establishment of a high-risk pool if federal law were changed to allow one?

Most Republican responses expressed support for state-run high risk pools, but also noted that they would need to receive “adequate” federal funding to sustain them. (By one estimate it would cost more than $1 trillion over 10 years to fund high risk pools in all the states, but still wouldn’t cover as many people as the ACA). A few respondents, such as Massachusetts and New Hampshire, observed that past state experiences with high risk pools had not been successful. “The segregation of high risk people is not an effective approach to bringing down costs,” noted New Hampshire’s insurance commissioner.

Question 8: What timing issues, such as budget deadlines, your legislative calendar, and any consumer notification and insurance rate and form review requirements, should we consider while making changes?

States’ budget and legislative timelines vary, but the Republican responses to this question emphasized that regulators and insurers would need sufficient time to implement policy changes. For example, Alabama’s governor anticipates that insurers would need “18 months at a minimum” to adapt to new rules and bring plans to market, while Arkansas’ leaders believed they could adjust to an ACA repeal within 90 days.

Question 9: Has your state adopted any of the 2010 federal reforms into state law? If so, which ones? What impact would repeal have on these state law changes?

Very few of the Republican-led states responding to this question had “baked in” the ACA’s 2010 market reforms into their state insurance code. A few had adopted them by regulation. However, these states indicated they could fairly easily be repealed.  Previous research by CHIR found that, as of January 1, 2012, only 12 states had enacted state-level laws implementing all of the ACA’s 2010 reforms.

What’s the takeaway for Congressional leaders from these letters? First, many Republican governors don’t want to see the ACA repealed without a clear, concrete replacement plan. Second, several Republican governors don’t want to see their residents lose coverage as a result of Congressional action. Third, while Republican state leaders broadly support greater autonomy for the states, many do not want at the same time to lose the federal funds that shore up their insurance markets and Medicaid programs. Congressional leaders should be applauded for asking for states’ input, but it remains to be seen whether and how that input will be incorporated into future Congressional action.