With the prospect of outright repeal all but gone, the nation’s health care overhaul is proceeding, and states that once resisted the politically divisive law now must decide how to implement its most innovative aspect: the online health-insurance shopping malls known as exchanges.
Beginning next year, the law requires states to establish Internet marketplaces in which individuals can compare and purchase private health insurance or, if eligible, enroll in public Medicaid coverage.
States that want to run their own exchanges without federal involvement have until Friday to notify the Department of Health and Human Services, but they get until Dec. 14 to provide the details.
“We expect that they (the department) will be very flexible with states and try to give them as much leeway as possible, both to move forward with an exchange if they miss the deadlines and also to make any modifications after that deadline,” said Caroline Pearson, the health reform director for Avalere Health, a Washington health care consulting firm. “So I do expect there’ll be a fair amount of flux.”
Small businesses also will use the exchanges to offer their employees a choice of coverage plans at group rates under the law’s Small Business Health Options Program.
Federal tax credits tied to income will help many shoppers pay for coverage on the exchange. Further, competition among insurers and a groundswell of customers are expected to keep premiums in check when enrollment on the exchanges begins next October and coverage takes effect in January 2014.
The law, which critics have derisively referred to as “Obamacare,” requires all Americans to have health insurance in 2014 or pay a fine.
More than 9 million people are expected to get coverage through the exchanges in 2014, and 25 million in 2017, according to Avalere’s projections.
Many states that opposed the health care overhaul didn’t prepare for the exchanges, hoping that a Mitt Romney presidential victory and a Republican takeover of the Senate would deal the law a death blow. But President Barack Obama won and Democrats expanded their Senate majority, injecting it with new strength and forcing resistant states to fall in line.
On Tuesday, Florida Gov. Rick Scott, a sharp Republican critic, said he now wanted to negotiate with the Obama administration, after previously blocking all advance work on an exchange for his state.
“The election is over and President Obama won,” Scott told the Associated Press. “I’m responsible for the families of Florida. . . . If I can get to ‘yes,’ I want to get to ‘yes.’ ”
States may operate and administer their exchanges themselves or in partnership with the HHS.
While the numbers might change, at least 14 states and the District of Columbia will have state-run exchanges, according to Avalere. California was the first state to pass legislation creating an exchange. The others are Colorado, Connecticut, Hawaii, Kentucky, Maryland, Massachusetts, Minnesota, Nevada, New York, Oregon, Rhode Island, Vermont and Washington.
States that run their own exchanges have the authority to make operational decisions on how they’ll be built, who builds them and what health plans will be featured. In partnership exchanges, states divide operational and management responsibilities with the federal government.
Not every state is moving aggressively.
At least 11 that opposed the health care law probably will end up with federal insurance exchanges run entirely by Washington. Among them are Kansas, Missouri, South Carolina, Texas and Alaska, the only state not to accept $1 million in federal seed money to study building its own exchange.
Brett Graham, the managing director at Leavitt Partners, which advises Republican-led states on the health care law, said control was “really critical when you start thinking about your individual (state) insurance market.” Otherwise, the federal government regulates the local insurance market. “So you’ve ceded that to them,” he said.
In Mississippi, Insurance Commissioner Mike Chaney sent plans for a state-run exchange to HHS Secretary Kathleen Sebelius’ department Wednesday, despite Republican Gov. Phil Bryant’s opposition.
Bryant said he regretted Chaney’s decision, adding that the federal government “has never funded a program it did not eventually control and expand. ... This is one more step toward the largest entitlement-program expansion in American history.”
Mississippi already has a private insurance exchange up and running. Under Chaney’s plan, it would become the state-run exchange under the health care law.
Georgia Gov. Nathan Deal, a Republican, hasn’t formally expressed his state’s intentions, but he’s expected to opt for the federal exchange.
Georgia had stopped planning its exchange, claiming that the law’s regulations prevented the state “from creating a true Georgia model,” Deal spokesman Brian Robinson said.
Kansas also will use the federal exchange, after Republican Gov. Sam Brownback told Kansas Insurance Commissioner Sandy Praeger that he wouldn’t support her proposal to run the exchange in partnership with Washington.
“Kansans feel Obamacare is an overreach by Washington and have rejected the state’s participation in this federal program,” Brownback said last week.
“The governor has made his decision,” Praeger said.
Wisconsin was expected to choose the federal exchange, but Republican Gov. Scott Walker is facing increased pressure from liberal and conservative organizations to set up a state-run exchange.
But even with the federal government’s new flexibility on deadlines, it may be too late for states such as Florida and Wisconsin to develop state-run systems now.
“They may have waited to the point where they need to start being realistic and quickly move towards other options, so they don’t find themselves in a federally facilitated exchange,” Graham said.
These states may be better served in a partnership exchange, in which they could control decisions on planning and contracting while leaving eligibility and enrollment issues to the federal government, Pearson said.