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States moving on AHPs, CON

The Affordable Care Act regulates much of how state health insurance markets are allowed to operate. However, states still have some policy levers to use to reform their healthcare markets.

Certificate of need reform and association health plans are two of those tools. The state legislatures in Georgia, Tennessee, Vermont have begun these debates in chambers.

To our north, in Vermont, the state is hosting its first association health plan under the new Trump administration AHP rule:

Vermont also passed legislation in 2018, and the new law requires the state insurance commissioner to “regulat[e] association health plans in order to protect Vermont consumers and promote the stability of Vermont’s health insurance markets, to the extent permitted under federal law, including rules regarding licensure, solvency and reserve requirements, and rating requirements.” After the commissioner issued a new regulation establishing guidelines for AHPs including coverage requirements for essential health benefits, two business associations, Business Resource Services and the Vermont Association of Chamber Executives, announced they would start an AHP. Both the state consumer advocate and an insurance company have criticized the insurance regulator for not adopting stricter rules, and a legislative committee signaled its disapproval, suggesting that the legislature may revisit the issue.

Additionally, 11 states—including CSG/ERC states Delaware, Maryland, Massachusetts, New Jersey, New York, and Pennsylvania—and the District of Columbia—are suing to strike down the AHP regulation by arguing that the Labor Department exceeded its authority and violated the Affordable Care Act’s insurance provisions. Although the case is ongoing, the states’ arguments appeared to have resonated with the federal district court in Washington, D.C., at a January 24, 2019 hearing.

To the south, the Georgia legislature held hearings on the future of the outdated certificate of need laws that regulate the state’s healthcare facilities as well as some changes to the transparency of non-profit hospitals:

House Bill 198 and Senate Bill 74 would generally replace the CON structure (except as it applies to nursing homes and home health agencies) with a licensing framework, easing many of the current rules.

State Rep. Matt Hatchett, a Dublin Republican and sponsor of the bill, said Wednesday that the legislation seeks to stabilize rural hospitals, promote transparency among nonprofit hospitals and drive down health care costs and insurance rates.

Rep. Terry England, an Auburn Republican and also a sponsor, added, “We’re trying to do what’s best for the patient.’’ It aims to promote access, affordability and quality of care, he said.

Provisions of the House bill include:

  • Allowing Cancer Treatment Centers of America to add more beds and serve more Georgia patients at its Newnan hospital
  • Permitting a sports medicine center to be built in Alpharetta
  • Relaxing restrictions on ambulatory surgery and imaging centers
  • Requiring transparency for nonprofit hospitals’ financial holdings
  • Setting up separate licensing rules in metro Atlanta vs. the rest of the state.
  • Raising the requirements for hospitals to meet certain levels of indigent and charity care

To the west, Tennessee is also considering to what extent the state needs to keep the certificate of need regime in place:

On Feb. 11, Sen. Mike Bell of Riceville and freshman state Rep. Mark Hall of Cleveland introduced a bill that would change the requirements for hospital CON requests. Their measure, SB1390, removes the requirement to file a CON in order to build a satellite emergency department facility or offer cardiac catheterization services.

The bill has been referred to the Senate Commerce and Labor Committee.

“I think the certificates of need are no more than state governments overstepping boundaries and creating monopolies,” Hall told the Times-Free Press. “Cleveland and Bradley County have experienced so much growth. We need more availability and we need our medical facilities to grow with it.”

Tennessee is one of 35 states that have CON laws, but HB1085, sponsored by Knoxville Rep. Martin Daniel, would repeal the system altogether. As introduced, Daniel’s bill would not only remove CON requirements, it would altogether terminate the Tennessee Health Services and Development Agency that regulates them.

The North Carolina General Assembly has the opportunity to join these states by looking at state level healthcare reform. Given the long-standing research that shows how certificate of need (CON) laws contribute to less competition, higher costs, and lower quality. North Carolina should look at reforming, or altogether eliminating, the current CON laws.

In addition to this, The North Carolina General Assembly could also pass a bill that would make it easier for North Carolinians to form and access association health plans. These are high-quality, affordable plans that are very difficult to form and use now.

Jordan Roberts / Health Policy Analyst

Jordan joined the Locke Foundation in the summer of 2018 as Health Care Policy Analyst. He analyzes state and national health policy issues with an eye toward removing governm...

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