Photo: President Barack Obama fist-bumps a medical professional in the White House prior to a health-care event in March/Photo courtesy of the White House/Pete Souza

States are just beginning to confront the technology implications of federal health-care reform. At first blush, the new health-care law holds big risks and equally big opportunities for state governments, which will shoulder most of the burden of implementing these sweeping changes.

On March 23, President Barack Obama approved health-care legislation that's expected to extend health insurance to an additional 32 million Americans. About half of those newly insured citizens will get their coverage through state Medicaid programs, thanks to expanded eligibility for these low-income insurance plans. Many of the rest will receive government subsidies to help them afford health coverage.

Technology upgrades could be pivotal to cutting the cost of delivering these new services - a notion that's getting more attention in state houses across the nation, according to Ray Scheppach, executive director of the National Governors Association.

"There's a lot of opportunity, but it's going to put a big burden on states," said Scheppach, speaking at the National Association of State Chief Information Officers (NASCIO) mid-year conference in April. "To me, there is high risk around these changes because the federal government hasn't been willing to put the money in for the upgrade of systems. But there's a high potential benefit for states that do it well."

From an IT perspective, health-care reform hits states from several directions. Medicaid eligibility systems will strain to handle millions of new applicants - and these systems will need to connect with other state and federal systems to accommodate new eligibility requirements. States must decide if their current Medicaid systems can be upgraded or if total replacement is necessary, Scheppach said. Either way, they'll need to add features like online benefits sign-up for Medicaid applicants that let agencies deliver benefits more efficiently.

The health-care legislation also envisions new state-run health insurance exchanges - essentially Web portals that will match citizens with insurance plans that meet their needs. These exchanges will need connectivity to other state and federal systems to determine eligibility for Medicaid coverage or federal subsidies.

In addition, health insurance exchanges - which will aggregate millions of health insurance customers - also could give states leverage to force health insurers and providers to adopt electronic health records (EHRs) and other money-saving technologies.

Using technology to cut the cost of delivering health benefits may prove fundamental to the long-term viability of health-care reform. Governors already worry that growing Medicaid caseloads and a spiraling federal budget deficit could prompt the feds to cut Medicaid reimbursements to states, according to Scheppach, forcing states to pay a larger share of the cost for providing health coverage to low-income families.

"We really have to get the costs down to something that's sustainable," he said.

As state governments struggle to simultaneously expand health-care coverage and cut the cost of providing it, here's a closer look at some of the biggest technology issues.

1. Upgrading Medicaid Eligibility Systems

According to some states, the massive expansion of insurance coverage - the flagship of the health-care overhaul - comes at a steep price.

The new law expands Medicaid programs to cover low-income Americans who earn up to 133 percent of the poverty level (or $14,404 for an individual and $29,326 for a family of four). Although the expansion isn't required for all states until 2014, a Kaiser Health News article pointed out that the vast increase could bring 15 million more people into the safety-net program nationwide, according to the Congressional Budget Office.

As the millions of potential recipients pour into Medicaid programs, the influx threatens to strain eligibility systems - especially now, with many states already suffering from

Russell Nichols  |  Staff Writer