The Launch of the Affordable Care Act in Selected States: The Financial Impact on States from the Affordable Care Act

The Launch of the Affordable Care Act in Selected States: The Financial ImpactACA Implementation—Monitoring and TrackingMarch 2014John HolahanThe Urban Institute ACA Implementation—Monitoring and Tracking: Cross-Cutting Issues 2INTRODUCTION This brief is one in a series examining what selected states are likely to accomplish in terms of implementing the Affordable Care Act (ACA): expanding health insurance coverage; providing outreach, education, and enrollment assistance; increasing competition in individual and small group insurance markets; reforming insurance market rules; and addressing issues related to provider supply constraints. In this series, we compare eight states: five that have chosen to aggressively participate in all aspects of the ACA (Colorado, Maryland, Minnesota, New York, and Oregon) and three that have taken only a limited or no participation approach (Alabama, Michigan, and Virginia). The focus of this brief is the financial implications of reform for these states and how the ACA will affect state residents and economies.The study states were chosen from among those participating in a multiyear project funded by the Robert Wood Johnson Foundation (RWJF). The project provides to states in-kind technical support to assist them with implementing the reform components each state has chosen to pursue; the project also provides funds for qualitative and quantitative research to monitor and track ACA implementation at the state and national levels. RWJF selected these states based on their governments’ interest in exploring the options related to state involvement in ACA implementation. Some states pursued implementation aggressively, but in others varying degrees of political opposition to the law lessened their involvement. The result is that the variation in state commitment to health reform among the RWJF states reflects the same variation seen nationally. The first set of states has been actively pro-reform. They have adopted several Medicaid expansions in years preceding the ACA and have also adopted important insurance reforms. They were quick to adopt the ACA, including engaging stakeholders and investing in consumer outreach and education. Very early in the process, they contracted with information technology vendors to develop eligibility and enrollment systems, though not all of them have seen a smooth rollout of their websites. These states have created State-Based Marketplaces (SBMs) and have adopted the optional Medicaid expansion.In the second set of states, there has been strong opposition to ACA implementation, at least in some quarters. Relative to the first set of states, these states have historically had lower rates of employer-sponsored coverage and higher uninsurance rates. Because of their current circumstances, they have more to gain from health reform than do the other five states. All three rely on the federal government to develop and run their Marketplaces—Federally Facilitated Marketplaces (FFMs)—although Michigan and Virginia have taken on the Marketplace responsibilities associated with plan management. Two of the three—Alabama and Virginia—have not adopted the Medicaid expansion. All rely on the With support from the Robert Wood Johnson Foundation (RWJF), the Urban Institute is undertaking a comprehensive monitoring and tracking project to examine the implementation and effects of the Patient Protection and Affordable Care Act (ACA) of 2010. The project began in May 2011 and will take place over several years. The Urban Institute will document changes to the implementation of national health reform in Alabama, Colorado, Illinois, Maryland, Michigan, Minnesota, New Mexico, New York, Oregon, Rhode Island, and Virginia to help states, researchers, and policy-makers learn from the process as it unfolds. This report is one of a series of papers focusing on particular implementation issues in these case study states. Cross-cutting reports and state-specific reports on case study states can be found at www.rwjf.org and www.healthpolicycenter.org. The quantitative component of the project is producing analyses of the effects of the ACA on coverage, health expenditures, affordability, access, and premiums in the states and nationally. For more information about the Robert Wood Johnson Foundation’s work on coverage, visit www.rwjf.org/coverage. ACA Implementation—Monitoring and Tracking: Cross-Cutting Issues 3federal website; however, even as these problems are resolved, these states will still have fewer resources to devote to outreach, education, and enrollment assistance. FINANCIAL IMPLICATIONS FOR STATE OF THE ACABecause of the 2012 Supreme Court decision, the Medicaid expansion is now an option for states. Six of the eight states, including all the SBM states, have chosen to expand Medicaid. Alabama and Virginia have chosen not to expand Medicaid at this time. States that have chosen to expand Medicaid under the ACA will benefit from a large amount of