Fate of Health Law Now Clear, States Rush to Meet Deadlines

By ABBY GOODNOUGH and ROBERT PEAR

After nearly three years of legal and political threats that kept President Obama’s health care law in a constant state of uncertainty, his re-election on Tuesday all but guarantees that the historic legislation will survive.

Now comes another big hurdle: making it work.

States will need to hustle to put in place the various pieces meant to help their residents meet the contentious requirement of having health insurance by Jan. 1, 2014. The federal government is under immense pressure to provide more guidance, while building its own tools to ensure the law’s success.

With Mitt Romney’s vow to “repeal and replace” the law no longer a threat, its supporters are exulting. Bill Foster, a Democrat elected to the House from a suburban Chicago district, summarized the message of the election this way: “For our district and for our country, the debate on Obamacare is over.”

But Mr. Obama and his allies must now step up efforts to promote and explain it to a public that remains sharply divided and confused about it. In exit polls on Tuesday, nearly half of voters said the law should be either partly or fully repealed.

“There is still a tremendous amount of disinformation out there,” said Jeff Goldsmith, a health industry analyst based in Virginia. “If you actually are going to implement this law, people need to know what’s in it – not just the puppies-and-ice-cream parts, but ‘Here are the broader social changes intended and how they can help you.’ ”

The health care overhaul still faces resistance from many Republican members of Congress, governors and state legislators. In the 11 weeks before Inauguration Day, Mr. Obama faces crucial choices about strategy that could determine the success of the law in the next few years: Will the administration, for example, try to address the concerns of insurers, employers and some consumer groups who worry that the law’s requirements could increase premiums? Or will it insist on the stringent standards favored by liberal policy advocates inside and outside the government?

Much now depends on the states, where lawmakers will decide in the coming weeks and months whether to build online marketplaces known as insurance exchanges, where individuals and small businesses can shop for health plans, and whether to expand their Medicaid programs to reach many more low-income people.

The clock is ticking on the exchange question in particular: states have until Nov. 16 to decide whether they will build their own exchange or let the federal government run one for them.

So far, only about 15 states and the District of Columbia have created the framework for exchanges through legislation or executive orders; three others have committed to running exchanges in partnership with the federal government. A number of Republican governors, including those in Arizona, Idaho, New Jersey, Virginia and Tennessee, had said they would decide after the election, giving themselves only a 10-day window before the deadline.

“I would expect that starting today there are a significant number of fascinating conversations going on behind closed doors in state capitols all over America,” said John McDonough, a professor of public health at Harvard who helped draft the law.

State efforts to carry out the new law will coincide with epic negotiations between Mr. Obama and Congress over federal spending and taxes.

Some observers believe that costly provisions of the health care law, like federal subsidies to help families with incomes up to 400 percent of the poverty level pay their insurance premiums, could be scaled back in the name of deficit reduction.

“We know folks on the Hill are talking about this already,” said David Smith, an analyst at Leavitt Partners, a consulting firm that advises states on the law. “There are a lot of competing factors, but they have to find the savings and we believe health care will be one of the places where they will go.”

Another target for budget-cutters could be the planned expansion of Medicaid to people with incomes up to 133 percent of the poverty level — a crucial step toward the law’s goal of insuring about 30 million Americans.

When the Supreme Court upheld the health care law in June, it ruled that states do not have to participate in the expansion. But for those that do participate, the federal government would pay the full cost for the first three years, starting in 2014, and gradually decrease its share to 90 percent in 2020 and beyond. As part of a debt-reduction deal, Mr. Smith said, the Obama administration could agree to reduce the federal share.

In the nearer term — perhaps within weeks — the Department of Health and Human Services is expected to issue a torrent of federal regulations and informal guidance to carry out the new health care law. Without these rules, insurance executives said, it is virtually impossible for them to devise the health plans that will be offered in every state through insurance exchanges.

The marketing of those health plans begins in October 2013, for coverage starting Jan. 1, 2014. But state insurance regulators say they need to start reviewing the new products — for compliance with federal and state laws — in the first few months of 2013.

Justine G. Handelman, a vice president of the Blue Cross and Blue Shield Association, said insurers were still waiting for the administration to define “essential health benefits” and provide details of “insurance market reforms” and consumer protections at the heart of the law.

The law says, for example, that rates for older subscribers cannot be more than three times the rates for young adults. But, Ms. Handelman said, the administration has not said how those ratios will be calculated. Will the government compare premiums for a 64-year-old and a 19-year-old? Or will it compare the rates for different age groups — 55 to 64 and 19 to 25, for example?

The White House also has yet to issue rules for the insurance exchanges that will be run by the federal government in states that are unable or unwilling to do so.

Moreover, employers are anxiously waiting for the Internal Revenue Service to say how it will determine whether employers are providing affordable coverage to their employees. Specifically, the I.R.S. has yet to say whether employers will be required to provide coverage only to employees, or to workers and their dependents.

Although there is no deadline for states to indicate whether they will expand Medicaid, hospitals and other stakeholders are already lobbying the states to do so. Hospitals will see reimbursement rates trimmed under the health care law, and expanding Medicaid would bring new paying customers to help cover their losses.

Some states are worried about the cost, regardless, and have talked about pursuing a partial expansion instead. Whether the Obama administration would allow that is one of the many questions awaiting answers.

While the prospect of repeal appears dead, Professor McDonough predicted that Republicans in Congress would still seek to delay the fulfillment of the law’s major components — the mandate that most Americans carry health insurance by January 2014, for example, and the premium subsidies. That would be “a trap,” he said, because the Senate could theoretically flip to Republican control in November 2014, presenting “a new set of opponents to blockade implementation.”

Brett Graham, a partner at Leavitt Partners, said he did not think that a delay was likely, but that the Obama administration, realizing it may be impossible for many states to be ready by January 2014, might redefine what they need to do by then. For example, he said, federal officials might allow a state exchange that looks less like “a Formula One race car” and more like “a go-kart.”

“Part of this is redefining what the expectation is,” he said, “and we fully expect them to do that.”