Health Care Law Under the Microscope: Can It Solve States' Health Crisis?

Jan. 13, 2011— -- As lawmakers in Washington revive the debate over whether to repeal the health care law, Americans -- burdened by rising insurance premiums and cost cuts in Medicaid -- are wondering whether the new law can ease the pain many consumers are feeling physically and financially.

In Arizona, the death of two Medicaid recipients who were denied organ transplants has triggered a national backlash, but the state is warning of further cuts to come.

From California to Iowa, insurers are hiking premiums, despite new regulations calling for more transparency on rate changes and billions of dollars being funneled to states to improve their rate review processes.

States blame dismal budgets for the Medicaid crisis, while insurers say years of rising costs -- not the health care law -- are translating into rate hikes.

The financial pressures on both the public and private sectors come as billions of dollars are being poured into states to aid with Medicaid expansion and rate reviews. It's money that administration officials say will help boost the U.S. health care system in the long term. But thus far, it has had little impact on the impending crisis for consumers.

The Obama administration has awarded $46 million to 45 states to help them develop and strengthen their rate oversight processes, and it will award another $200 million in coming months. California received $1 million of that federal money.

However, only 26 states and the District of Columbia -- not including California -- have the legal ability to reject rate increases they consider "unreasonable." So while California may be strengthening its rate review process, insurers can still go ahead and impose massive rate hikes at will.

Read more about new health care provisions and how they will affect you.

Health and Human Services also implemented a separate rule whereby all insurers that have proposed a rate increase of more than 10 percent will be required, starting July 1, to justify the hikes publicly, and those insurance companies that have a history of unreasonable increases will not be allowed to participate in insurance exchanges -- a marketplace where individuals and small businesses can shop for coverage -- starting in 2014.

The new rules, supporters say, are designed to make the system more transparent, but at the end of day, the decision on how much to increase rates lies with the insurer.

Medicaid Crisis Continues Despite New Health Care Law

On the Medicaid front, the federal government has vowed to support the extension and give money to states that meet a set of requirements. But states like Arizona aren't required to provide benefits such as organ transplants, and they can cut additional benefits at their discretion.

Experts say that Medicaid cuts will keep coming until the economy improves. Massachusetts Gov. Deval Patrick has warned that his state needs to rein in its Medicaid costs and possibly cut benfits. Wisconsin has cut caesarean sections for pregnant women unless they are medically necessary. Texas Gov. Rick Perry and other Republican lawmakers in the state have suggested eliminating Medicaid altogether.

Supporters of the health care law admit that the legislation is not without its loopholes, but argue that in its absence the situation would have been more dire.

"There's no magic bullet in the law but there are a a lot of aspects in the health care law that are designed to make the system work more efficiently," said Alan Weil, executive director of the National Academy for State Health Policy, citing ongoing benefits such as the elimination of pre-existing condition for children and no lifetime limits on coverage as examples of improving health coverage for consumers.

Weil argues that it will take some time before the full effects of the benefits kick in, and that states will need the federal dollars given to them under the Affordable Care Act when the stimulus money dries up this summer.

But that process could be complicated by Republicans in the House of Representatives who are planning to repeal the health care law, even if only in a symbolic gesture.

The Congressional Budget Office has estimated that repealing the health care law would cost $145 billion through the end of the decade and $230 billion by 2021, and that it would add to the federal budget deficit by a total of roughly $145 billion.

But House Republicans are vowing to move forward with their plans.

Speaker of the House John Boehner, R-Ohio, has blasted the "job-killing health care law" and his office blamed Democrats for "rigging" the CBO estimate.

Supporters of the health care law blame Republicans for a double standard.

"This is making a whole lot visible the double standard in Republicans' support of repeal. The double standard is they want to take away from the American people what they want to keep for themselves courtesy of the American taxpayer," said Ron Pollack, executive director of Families USA.

The one upside of the renewed debate, he said, is that it will give supporters the chance to explain the law's benefits more clearly to Americans.

Opposition to the health care reform law outstripped support by a record margin, 52 percent to 43 percent, in an ABC News/Washington Post poll last month. That marked a new low for the law since it was enacted early last year.

More also continue to "strongly" oppose the law than to strongly support it, 37 percent to 22 percent.