Administration tries to sell states on health insurance exchanges

Kaiser Health NewsSeptember 19, 2011 

WASHINGTON — Worried that the federal government could end up running new insurance marketplaces for dozens of states, the Obama administration is making a new pitch Monday for cooperation to 46 states and the District of Columbia.

Health officials from the states are meeting in D.C. with the administration, which is proposing several models for ways to divvy up exchange duties between Washington and the states.

The exchanges, which open in 2014, are a key component of the health care law, allowing individuals and small businesses to shop for coverage from a range of insurers, see if they qualify for low-income subsidies to help them buy policies, or enroll in Medicaid if they meet income requirements. The federal government will run exchanges for states that can't — or won't — do it themselves.

Exchange legislation efforts have failed in 16 states — a demonstration of the widespread opposition to the law in states governed by Republicans. But the bipartisan participation in Monday's meeting indicates a level of political pragmatism, even from states that vehemently oppose the law.

Alan Weil, executive director of the National Academy for State Health Policy, described the conundrum Republican governors are facing.

"As political leaders they can say they hate the law, but as head of the executive branch, they have to be prepared," Weil said. "Some are saying they are so confident (the law is) going away that they are not going to do anything. Some are saying they hope it goes away but for now it's the law. ...They are contingency planning."

Planning for exchanges is something the Obama administration is working to encourage.

"The notion of having many state exchanges completely federally run may not be appealing to the administration," said Linda Blumberg, senior fellow at the Urban Institute's Health Policy Center. "The feds have been trying to be more aggressive about discussing partnership options with the states. They are looking for mechanisms for more flexibility to give states a hand in it without this being overwhelming to the states."

The partnership model helps states decide which functions they are ready to perform and which they would like to leave to the federal government, and for how long, said Steve Larsen, director of the Center for Consumer Information and Insurance Oversight at the Department of Health and Human Services. "This model allows HHS and the states to be as logical and efficient with our resources as possible, while giving states the opportunity to perform the functions most important to tailoring an exchange to the unique needs of their state."

According to the Center on Budget and Policy Priorities, 10 states have passed or enacted legislation putting them on a path to state-run exchanges, and legislation is pending in seven states.

HHS on Monday is previewing for states three possible options for partnership. In lieu of the federal government taking over the entire exchange operation, a state could choose to share responsibilities for managing the participation of health plans, helping consumers navigate the system, or both. The specific state responsibilities were chosen in part because states already serve some of these functions through insurance commissioners or other parts of their governments.

When it comes to health plans offered through the exchange, for example, states could oversee the selection of plans, collecting and analyzing information on rates and benefits and collecting performance data that the plans must report.

The second option would have states handling the personal component of the exchanges. For example, states would take charge of in-person assistance and manage people who will help consumers navigate the new system. States would also be responsible for consumer outreach and education.

That would leaves HHS to handle eligibility and enrollment, with the goal of achieving a seamless experience, where people can move between Medicaid and private insurance coverage on an exchange as their income situations change.

(Kaiser Health News is an editorially independent news service of the Kaiser Family Foundation, a nonpartisan health care policy organization that isn't affiliated with Kaiser Permanente.)

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