Early in 2020, governors across the country advocated for a range of health policy initiatives. In “state of the state” addresses, they outlined plans to improve consumer access to coverage and care through protections against surprise billing, coverage expansions, reinsurance programs, and more.
As “laboratories of democracy” and the primary regulators of insurance, states have often led the way with policies that expand access to comprehensive and affordable health insurance and health care services. Since the Trump administration began rolling back major provisions of the Affordable Care Act (ACA), numerous states have stepped up to ensure market stability and robust consumer protections.
State legislative sessions are thus typically a flurry of health policy activity. In recent years, state lawmakers have taken action to stabilize their insurance markets and increase access to coverage. But like so many other constants we have come to rely on, state legislative sessions took a hit this year from the novel coronavirus (COVID-19) pandemic.
State Legislatures Faced an Uphill Battle During the COVID-19 Pandemic
In March and April, stay-at-home orders and other social distancing measures forced non-essential businesses, schools and universities, and other organizations to cease in-person activities. State legislatures, most of which are customarily in session sometime between January and May, were compelled to delay sessions, convene virtually, or adjourn before the planned end date. A majority of states postponed legislative sessions or adjourned early. Some continued to meet virtually, but lawmakers and other stakeholders described difficulties moving to a remote legislative process. As state legislatures have reconvened, outbreaks in some state capitols have caused further setbacks.
In addition to the challenges of convening a legislative body, states are currently strapped for cash. The significant funding needs of a largely state-led pandemic response and the economic shutdown that has left tens of millions of people unemployed have created substantial budget shortfalls across the country. Expanding coverage, addressing affordability issues, and other legislative actions often require appropriating state funds, and in many states, the coffers are empty.
Current and Future State Health Policy Initiatives Are in Jeopardy
Facing budget shortages, remote sessions, and shortened timelines, legislatures across the country were forced to abandon a number of health policy proposals aimed at expanding access to health insurance. In Colorado, stakeholders were involved in a multi-year effort to create a state public health insurance option, but lawmakers ultimately dropped the proposed bill because of the pandemic. The Connecticut legislature also considered a bill to create a public option, along with proposals to establish a state reinsurance program and further protect residents from surprise billing. The already shortened legislative session was just underway when the legislature recessed due to the COVID-19 pandemic and ultimately adjourned without further legislative action. Connecticut lawmakers enacted only a fraction of legislation compared to previous sessions. In Kansas, Governor Laura Kelly fought to expand the Medicaid program under the ACA this year, but the effort was ultimately struck down by the state legislature, in part due to Kansas’s projected budget deficit and abbreviated legislative session. Earlier this year, California Governor Gavin Newsom’s budget proposal included an expansion of California’s Medicaid program to undocumented elderly adults, but the final budget deal that accounts for COVID-19-related fiscal constraints delays this provision.
In addition to new health policy proposals, COVID-19 has put states’ current coverage programs at risk. Some states may cut Medicaid spending at a time when Medicaid rolls are surging. Colorado has cut funding for several mental health and substance use treatment programs due to a budget gap. In Washington State, Governor Jay Inslee suggested that the state’s new public option will take a “preliminary approach” in its initial year, describing the program as a “multi-year journey.” State reinsurance programs, which are proven to reduce the cost of health insurance, are also at risk. State officials have asked Congress to establish a federal reinsurance program, pointing to the shortfall in state revenues and challenges generating financing for their programs. Similarly, Georgia’s plans to establish a state reinsurance program have been delayed by a year due to the financial strain of the state’s COVID-19 response.
In a Pandemic that Underscores the Importance of Health Care Access, States are Still Working to Protect Consumers
The havoc wrought by the COVID-19 pandemic has stunted state health policy growth. At the same time, the critical need across the country for testing, treatment, and public health initiatives illustrates the importance of expanding access to insurance, addressing affordability, and filling in the gaps of the current health coverage system. To this end, states have continued their key health policy role despite the pandemic’s disruptions to legislative sessions through actions that ensure greater private insurance coverage of COVID-19-related services, initiatives to enroll the remaining uninsured and rate review processes that may help curb the impact of the pandemic on premiums.
And many states still managed to pass meaningful health insurance reform legislation. For instance, Colorado recently enacted legislation creating a Maryland-style “Easy Enrollment” program where state residents check a box on their tax return to find out if they qualify for free or low-cost health insurance, and access a special enrollment opportunity if they are eligible for subsidized marketplace coverage. The Colorado legislature also passed a bill that extends an ACA assessment on health insurers to help fund the state’s reinsurance program and future state-level premium subsidies. Virginia enacted legislation to create a state-run health insurance exchange. A handful of states, including Illinois, Minnesota, and New Mexico, enacted legislation to limit insulin cost sharing for consumers. And in Georgia, the legislature passed a bill to establish protections against surprise medical bills.
The COVID-19 pandemic has upended lives around the world, creating unprecedented challenges and exacerbating existing issues with health insurance access and affordability. States, which have spearheaded pandemic response, can ordinarily use the first half of the year to pass legislation aimed at addressing those disparities and promoting stable insurance markets. They should also – in normal times – be able to rely on the federal government to provide a financial lifeline and set some minimum standards for consumer protections. But this is no ordinary year, and federal leadership on any of these issues is largely absent. States will likely continue to have to go it alone, and in many cases without a legislature in active session and without the resources they need to finance new and existing health policy initiatives. For state officials charged with combatting the pandemic and helping consumers maintain access to coverage, regulatory flexibility and administrative creativity will be required.