Though Texas will join 26 other states in defaulting to a federal marketplace for purchasing health insurance — a major component of the Affordable Care Act — it is one of only six that will not enforce new health insurance reforms prescribed by the law. It's a decision some say could lead to confusion over who's responsible for protecting Texas insurance consumers.
Because Texas did not create its own state-based marketplace, known as a health insurance exchange, under the Affordable Care Act, it must use a federally facilitated one instead. By federal law, the state must enforce provisions and regulations related to the insurance exchange and market reforms unless it notifies the federal government that it cannot or will not. If a state does not enforce those reforms, the federal Centers for Medicare and Medicaid Services will step in to do it.
Texas, Arizona, Alabama, Missouri, Oklahoma and Wyoming have all notified the federal government that they will not be policing the health law. John Greeley, a spokesman for the Texas Department of Insurance, said his agency cannot enforce regulations tied to the federal insurance exchange or market reforms because it is not authorized to do so.
"We can't act on anything that doesn't exist in state law," he said.
Officials with CMS, who sent a letter to TDI acknowledging the state's decision, declined to comment for this story.
Stacey Pogue, a health policy analyst with the liberal Center for Public Policy Priorities, said she doesn't believe TDI's hands are tied. In the past, she said, the agency has responded to federal laws by "taking actions that ensure that they do have oversight."
The practical effects of the state's decision are not entirely clear yet. In the first show of autonomy, Texas was not required to comply with a federal request for information about its insurance plans. Most states defaulting to the federal health insurance exchange had to submit that information by July 31.
In the states that will not enforce the exchange and market reforms, the federal government will have to review insurance forms and respond to consumer complaints about health insurance, said Kevin Lucia, an assistant research professor with the Georgetown University Health Policy Institute’s Center on Health Insurance Reforms. Those duties, he added, are “typically reserved for state insurance departments.”
Pogue said the state's decision could create an “administrative burden” for insurance plans and could result in confusion for Texans who purchase health insurance under the federal exchange. For instance, she said, if people worry their insurance providers are discriminating against them based on their gender — a practice banned by the federal reforms — they may not know whether to report a complaint to CMS or to TDI.
“There’s all this opportunity to be bounced back and forth, which is a burden for consumers,” she said. If consumers have to report insurance violations to the federal government, that could prevent TDI from having a complete picture of consumers’ experience with insurance providers, she added.
“Consumers can be experiencing a lot of problems on the market that the state regulator doesn’t know about,” Pogue said.
Greeley said TDI has worked to make sure “insurers understand what their responsibilities are” under the ACA. And he said even if the state does not enforce federal regulations, TDI will still work to protect insurance consumers.
“Anybody that buys an insurance policy in Texas — no matter what line or how they got to it — can come to the Texas Department of Insurance for their questions,” he said.
David Gonzales, executive director of the Texas Association of Health Plans, said it’s unclear what impact the state's decision could have on insurance companies.
“I suspect it will be more of a burden for some plans than for others,” he said.
Pogue said inefficiencies could stem from the state’s refusal to enforce insurance reforms. TDI is the agency best equipped to regulate insurance plans in Texas, she said.
“Without a doubt they are the appropriate body,” she said.
This story was produced in partnership with Kaiser Health News, an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.