Source: hr3590.com
States will get one more month, until Dec. 14, to notify federal regulators whether they will set up and run their own health insurance exchanges, the U.S. Department of Health and Human Services told two governors in a letter dated Nov. 15. Without the extension, the deadline for signaling intent would have been Friday, Nov. 16.
The letter was addressed to Louisiana Gov. Bobby Jindal (R) and Virginia Gov. Bob McConnell (R). It reads in part:
You recently requested additional time to declare whether states will elect to run a state-based exchange. Under the law, we are required to certify states’ plans to run their own exchange in 2014 by Jan. 1, 2013. … States may [now] submit both letter of intent and application operate its own exchange by Dec. 14. States may apply to operate their exchange in partnership with the federal government by Feb. 14. And a state may apply at any time to run an exchange in future years.
HHS added the extra month because states that had refused to set up exchanges are now softening their stances in the wake of President Obama’s re-election on Nov. 6, most experts agree. For an overview of federal health reform, see Section 150 of the Guide to Self-Insuring Health Benefits.
States Are Changing Their Minds
A number of states were waiting to see outcome of the elections and the extra time will give states more time to figure out or to think more about their options, says Frank McArdle, an independent benefits consultant based in Bethesda, Md., who spoke to the Guide. The delay “makes sense to give states that awaited the results of the elections a few more weeks to firm up their decisions,” he added.
States have practical reasons for establishing exchanges themselves. States traditionally regulate insured health plans, and if they set up the exchanges, they will retain control over how that new marketplace looks and acts, McArdle said. “States will have philosophical and political views, and the stakeholders in the state will want [representation]; and states will be able to decide if they want a narrow number of plans participating or open the doors to a very broad market; most states that would rather make that decision.”
Before the election, 16 states (including California, Colorado, Connecticut, Kentucky, Hawaii, Massachusetts, Maryland, Minnesota, New York, Oregon, Rhode Island and Vermont) and the District of Columbia signaled their intent to run their own programs, according to Alan Weil, executive director of the National Academy of State Health Policy. Sixteen were still in the “no” column, with the remainder still sitting on the fence. For more information on the exchange program, see Chapter 8 of The New Health Reform Law: What Employers Need to Know.
The administration would prefer to see as many states set up exchanges as it can and failing that, it would rather that states adopt a partnership approach. States that build exchanges in a partnership with the feds have to note their intent by Feb. 15, 2013. The feds are tasked with setting up exchanges in states that refuse to do so independently or in partnership.
States that originally refused to start work on exchanges tended to be Republican-led states that had firm ideological objections to the plan in general. Many had also expressed concerns about the cost of building and operating an exchange.
Election Spurs New Movement
Post-election, the wall of opposition to implementing exchanges has been crumbling in a few places. The election, which removed any chance that health reform would be repealed before exchanges are implemented, softened the stance of states that previously refused to administer the new marketplaces.
Mississippi Insurance Commissioner Mike Chaney (R) on Nov. 15 formally notified HHS that the state will run its own exchange (and this comes in spite of objections of Gov. Phil Bryant (R)). A state-run exchange will allow Mississippi to control the types of health plans that will be offered to residents, Chaney said.
“If you default to the federal government, you forever give the keys to the state’s health insurance market to the federal government,” Chaney said. State regulation means Mississippi can set the minimum coverage requirements, regulate policies and make sure claims are paid promptly, he added.
Iowa Gov. Terry Branstad (R) in a Nov. 16 letter told the Obama administration, “Iowa will continue on its path to creating an Iowa-based exchange that is intended to protect the health of Iowans, ensure the integrity of our health insurance markets and safeguard our state budget from unnecessary turbulence.”
In Florida, longtime staunch reform opponent Gov. Rick Scott (R) in a Nov. 16 letter offered to negotiate with the feds about setting up a state-based exchange. “The citizens of our state are hopeful that you will accept our offer to partner with you to work together on solutions that will address the ever-increasing cost of health care and the need for better access by all Florida families,” his letter stated.
For this to be official, the three states will have to submit blueprints by Dec. 14. It is safe to say, however, that the number of states committed to running their own programs has now increased (to approximately 20) due to the election results.
Other states do not appear they will budge, and very likely will leave exchanges to be run by the federal government. Again according to news outlets, Texas, South Carolina, Missouri, Kansas and others say they will not set up insurance exchanges (or expand Medicaid programs) in their states as directed in the health reform law.
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