2023 State Legislative Sessions’ Health Highlights
Laura Buddenbaum and Sally Mabon, State Health and Value Strategies
States are traditionally laboratories for policy innovation and the 2023 legislative session was no exception as states enacted sweeping legislation to improve their healthcare systems. The expansion of health coverage was a major priority for states, particularly for low-income populations, children, postpartum individuals and individuals of undocumented status. To expand coverage, many states broadened eligibility requirements for public health insurance programs like Medicaid, the Children’s Health Insurance Program (CHIP) and Basic Health Programs. As the high cost of care continued to be a major barrier for consumers, states also bolstered their efforts to enhance healthcare affordability during this legislative session. Some states passed legislation to increase state oversight of the cost of healthcare, such as the authority to review mergers of large healthcare entities. Other states focused on making healthcare more affordable for consumers by limiting out-of-pocket costs, establishing subsidy programs and tackling the rising cost of prescription drugs. States also used the 2023 legislative session as an opportunity to study system innovations by legislatively mandating studies that will explore opportunities to expand health coverage and affordability. This expert perspective explores these three trends in state healthcare policy reflected in innovative legislation enacted this year.
Medicaid and Children’s Health Insurance Program Expansions
A major achievement of this year’s legislative sessions was the passage of legislation in several states expanding coverage to more individuals and families. North Carolina became the 40th state to expand Medicaid for individual adults up to 138% of the federal poverty level (FPL) under the Affordable Care Act (ACA), which will provide coverage for an estimated 600,000 people in the state.
Another significant achievement was the passage of continuous Medicaid eligibility for children in several states—a major step to give low-income children a healthy start by minimizing coverage loss and reducing churn. Minnesota’s Governor Tim Walz signed into law continuous Medicaid eligibility for children up to age six. This initiative will allow children who are enrolled in Medicaid to remain covered from the point they are eligible through age six, regardless of changes in household income. Colorado passed legislation that will require the state to seek federal approval to provide continuous eligibility for children less than three years old by April 2024 and study the feasibility of continuous coverage for children up to the age of six. Ohio also enacted legislation requiring the Department of Medicaid to implement continuous Medicaid enrollment for children through age three. These states join a handful of states that are in the process of implementing multiple years of continuous Medicaid eligibility for children—including California, Illinois and New Mexico. These states will pursue approval from the Centers for Medicare & Medicaid Services, building momentum for continuous eligibility and following in the footsteps of Oregon and Washington—the only two states with approved section 1115 Medicaid demonstration waivers for continuous eligibility for children through age six.
Other states also took action to expand coverage for low-income children. Arizona increased CHIP eligibility from 200% to 225% FPL, which is expected to expand coverage to approximately 9,500 kids in 2024 and over 12,000 kids in 2025. Florida increased CHIP eligibility up to 300% FPL and estimates an additional 42,000 children will become eligible for coverage.
This legislative session, several states advanced efforts to tackle the maternal mortality crisis by extending postpartum coverage. Alaska, Mississippi, Missouri, Nevada, Texas, Utah and Wyoming passed legislation this year to extend Medicaid coverage from 60 days to 12 months for certain postpartum enrollees (joining 37 other states that have implemented the 12-month extension), an option provided to states under the American Rescue Plan Act. Extending continuous coverage for one-year postpartum enables states to take a major step towards improving health outcomes for postpartum individuals and their babies by mitigating coverage loss, providing comprehensive coverage in the postpartum period to address maternal mortality and morbidity, and advancing health equity.
Coverage for Immigrant Children
Undocumented immigrants make up a significant portion of the uninsured in the U.S. as they are not eligible to enroll in Medicaid, CHIP, or Marketplace coverage. As a result, individuals who are undocumented experience significant barriers to accessing and affording healthcare which can lead to poor health outcomes. To date, 12 states and Washington D.C. provide state-funded coverage to income-eligible children regardless of immigration status. During this year’s legislative session, Connecticut increased the age limit for state funded Medicaid coverage of undocumented children up from 12 to 15 years of age, which is anticipated to increase enrollment by approximately 1,200 children. The legislation also directs the Connecticut Commissioner of Social Services to study the cost and benefits of extending coverage to individuals aged 25 and younger who meet eligibility requirements, regardless of immigration status. Also this year, New Jersey increased funding by $14 million for the Cover All Kids program, a state-funded initiative which provides Medicaid coverage to children under the age of 19 regardless of immigration status.
Basic Health Program Expansions
New York and Minnesota, the only two states that operate a Basic Health Program (BHP), used this legislative session to expand program eligibility. The BHP is a provision under the ACA which allows states to carve out coverage for low-income populations using federal funding equal to 95% of the amount the state would have otherwise received in the form of federal premium tax credits for individuals enrolled through the Marketplace. New York’s BHP, known as the Essential Plan, is currently available to New Yorkers up to 200% FPL. The state’s fiscal year (FY) 2024 budget authorized the state to extend program eligibility to New Yorkers with incomes up to 250% FPL using a section 1332 state innovation waiver under the ACA. The legislation outlines program requirements such as monthly premiums up to $15 for individuals between 200% to 250% FPL and $0 premiums for individuals below 200% FPL. If the waiver is approved, nearly 100,000 New Yorkers are expected to gain access to affordable coverage. Minnesota also expanded the state’s BHP, MinnesotaCare, to undocumented residents using state funding. More than 40,000 low-income, undocumented Minnesotans are expected to gain access to the program. As of July 2023, five states and Washington D.C. provide state-funded coverage for income-eligible adults regardless of immigration status.
Marketplace Policy – A New State-Based Marketplace and Protections for Preventive Services
Illinois’ Governor J.B. Pritzker signed legislation authorizing the state to establish a State-Based Marketplace (SBM), making it the 19th state to do so. The transition to an SBM will provide the state with real-time data on Marketplace enrollment which will allow it to better target uninsured communities, conduct outreach, and assist consumers in the enrollment process to expand healthcare coverage.
A handful of states implemented consumer protections in response to the federal district court’s ruling in Braidwood Management, Inc v. Becerra, which struck down a key provision in the ACA that requires health plans to cover and waive cost-sharing for many critical preventive services, including cancer and mental health screenings. The U.S. Fifth Circuit of Appeals granted an administrative stay in the case, which leaves the federal protection of preventive services with no-cost sharing protected for the time being. In anticipation of an appeal to the Supreme Court, Colorado, Illinois, Oregon, Minnesota and New York all moved to codify the coverage of preventive health services.
Confronting Healthcare Costs
A major barrier to access in the U.S. healthcare system is the high cost of care and the burden it places on those needing care. Underinsurance is a significant challenge for low-income individuals with health coverage who often struggle to afford healthcare expenses such as premiums and out-of-pocket costs. This legislative session, states took steps to address the high cost of care by increasing state oversight of healthcare costs, limiting out-of-pocket expenses and addressing medical debt.
Oversight of Costs
Included in Minnesota’s FY 2024 budget are several initiatives to address healthcare affordability. The state created a Center for Healthcare Affordability, which will study the drivers of health spending and collect data to inform a future spending target program. Also included in the state’s budget is the requirement that the Attorney General and the Department of Health will review proposed sales or mergers of healthcare entities to assess any adverse impacts on competition, costs, and spending.
New Mexico passed legislation to rename and reorganize the Department of Human Services into the Health Care Authority Department, intended to establish a single, unified department responsible for the purchase and regulation of healthcare and the development of policy to improve healthcare affordability. According to Governor Grisham, this creates an opportunity to leverage the state’s purchasing power and other policy tools to make high quality healthcare affordable and more accessible to all.
Coinciding with Illinois’ transition to an SBM, the state will join 41 other states as it institutes its first rate review process. Insurers will soon be required to meet reporting requirements, while the Department of Insurance was granted the authority to approve, modify, or disapprove premium rates in the individual and small group markets. The Department of Insurance will also release an annual report on coverage, affordability, and cost transparency.
Reducing Out-Of-Pocket Costs
Out-of-pocket costs in the form of deductibles, co-payments and coinsurance pose a significant barrier even for consumers with health insurance, and can lead to the delay or avoidance of care. Colorado and Mississippi targeted low-income populations by eliminating Medicaid co-payments for pharmacy and certain healthcare services, including inpatient and outpatient hospital services, primary care and specialist services, laboratory and radiology services and prescription drugs.
California enacted legislation to reduce out-of-pocket costs through Covered California, the state’s official health insurance Marketplace. The FY 2024 budget appropriated $82.5 million of the state’s Health Care Affordability Reserve Fund to support a state subsidy program beginning in 2024. Covered California estimates that about 40% of Marketplace enrollees will be eligible for cost-sharing reduction benefits and deductibles will be eliminated entirely in all silver plans. Other benefits such as reduced generic drug costs, copays and maximum out-of-pocket costs will vary by plan. The state has estimated the program will reduce costs for an estimated 600,000 to 900,000 enrollees.
Massachusetts’ FY 2024 budget included the expansion of state-based subsidies through the state’s Marketplace, the Massachusetts Health Connector. The state funded subsidy program ConnectorCare provides financial assistance on a sliding scale to enrollees based on income. The state will pilot a two-year expansion of ConnectorCare by increasing the income limit from 300% to 500% FPL. The state estimates the pilot will provide cost savings to more than 50,000 people and for the first time all health insurance carriers offering plans on the Marketplace will participate in the program.
Controlling Prescription Drug Costs
According to the Centers for Disease Control and Prevention’s National Center for Health Statistics, about nine million U.S. adults in 2021 reported not taking medications as prescribed because of the cost. Individuals who cannot afford their prescriptions often skip doses or delay filling them, which has a harmful effect on health.
During this year’s legislative session, New Jersey capped cost-sharing for EpiPens, insulin and asthma inhalers at $25, $35 and $50 respectively for a month’s supply. New Jersey will also establish a Drug Affordability Council to advance prescription drug affordability and create a new data and transparency system to collect, analyze and report on the drug pricing process.
Connecticut enacted legislation to create a free drug discount card program which will allow residents to receive savings up to 80% on generics and 20% on brand name drugs, and strengthened the state’s 340B drug discount program which provides affordable medications to low-income and uninsured patients. Under this legislation, Connecticut will also increase transparency of rising drug costs by publishing an annual list of large price increases.
Minnesota’s Prescription Drug Affordability Act has prohibited excessive price increases by manufacturers of generic drugs and established a Prescription Drug Affordability Board (PDAB) in the state. Legislation in Maryland, the first state to establish a PDAB in 2019, directs the state to create an action plan for setting upper payment limits on prescription drugs purchased by state and local government entities, plans, and programs. By the end of 2026, the PDAB and stakeholder council will submit a report and recommendations to the Legislature about the challenges and benefits of setting upper payment limits on all purchases or payer reimbursements on prescription drugs in the state.
Limitations on Hospital Facility Fees
Another significant, and often unexpected, cost burden for individuals obtaining healthcare services are hospital facility fees. These charges are levied by hospitals, outpatient clinics, and hospital-owned doctors’ offices to cover facility overhead expenses. Hospitals are not required to disclose facility fees before providing care, therefore many patients receive these unexpected charges in addition to costly bills for medical treatment. States including Colorado, Connecticut and Indiana extended existing laws or implemented new prohibitions on hospitals charging consumers facility fees during this year’s legislative session, following just a handful of other states that have passed related legislation in the last few years.
Addressing Medical Debt
For over 100 million people in America, or 41% of adults, the strain of expensive healthcare results in medical debt. In particular, low-income individuals and Black and Latino/a adults are more likely to accumulate medical debt and delay needed care due to cost. In a statewide effort to confront this issue, New Jersey’s FY 2024 budget appropriated $10 million in funding from the American Rescue Plan Act for a pilot partnership with RIP Medical Debt, a national nonprofit that purchases and eliminates medical debt for pennies on the dollar. This initiative could eliminate up to $1 billion of debt, the first statewide, publicly funded program of its kind. The District of Columbia’s Mayor Bowser also announced a plan to cancel hospital debt for many of the 90,000 residents in the District with unpaid medical bills. Individuals with incomes up to 400% of the FPL or those with medical debt at least 5% of their household income are eligible for debt cancellation. The District will use $900,000 in year-end surplus funds from the 2023 fiscal budget to cancel up to $90 million. These innovative approaches coincide with other state efforts during this legislative session to address the burden of medical debt, such as Colorado becoming the first state to prohibit the inclusion of medical debt in consumer credit reports.
Studying System Innovations
Several legislatively-mandated studies passed this session will require states to examine new and innovative approaches to ensuring their residents have access to affordable care and that the care meets the needs of patients beyond clinical settings.
The Maryland Department of Health and the Maryland Health Connection, the state’s official health insurance Marketplace, are directed to study options for offering healthcare and dental coverage to state residents ineligible for Medicaid/CHIP or qualified health plans due to immigration status. The legislation requires the findings and recommendations to be submitted to the Legislature by October 2023.
Minnesota’s Legislature required the state to perform an actuarial and economic analysis of a potential buy-in to the state’s Basic Health Program. The legislation also requires the state to assess the benefits and costs of universal health coverage to ensure all Minnesotans have health coverage.
The New Mexico Legislature has tasked the Department of Human Services, in coordination with the superintendent of insurance and the state’s Medicaid advisory committee, with studying the feasibility of a state-administered health coverage plan, known as Medicaid Forward. The approved legislation will have New Mexico assess the potential impacts of expanding the state Medicaid program to all, with out-of-pocket costs based on income.
Legislation enacted in Connecticut requires the Department of Social Services to assess the barriers that impact the health of Medicaid enrollees. The goals of the study are to improve Medicaid reimbursement, performance, and healthcare access and outcomes including high quality integration of primary, preventive and behavioral healthcare. The study will also assess innovative financing reforms that address health-related social needs such as social, economic and environmental drivers of health.
The 2023 legislative session demonstrated that states are laboratories for healthcare innovation. Over the course of the year, priorities included expanding health coverage within public health insurance programs, particularly for low-income individuals, children and the undocumented population. States confronted rising healthcare costs by increasing state oversight, limiting out-of-pocket costs and addressing medical debt. Lastly, several states are studying system innovations to transform their healthcare systems to be more accessible, affordable, and better serve the state.