Ready or Not: Health Insurance Exchanges Are Coming
By Debra Miller, CSG Director of Health Policy
With President Obama’s re-election and the Democrats retaining a majority in the U.S. Senate, the last hurdle to implementation of the Affordable Care Act is likely to have been crossed.
States face a pending deadline of Nov. 16 to submit their blueprint for a state health insurance exchange to the federal government, The federal government will step in and run the exchange in states that opt out of running their own. A third option is an exchange run in partnership by the state and the federal government; details for that option are not yet clear.
Brett Graham, managing director of consulting firm Leavitt Partners, called Nov. 16 the first marker and milestone for health insurance exchanges. But because it is not statutory, “we believe that the deadline is soft.”
The U.S. Department of Health and Human Services set the deadline and could hit the reset button, he said. Graham will be part of a panel discussion on health insurance exchanges during the 2012 CSG National Conference in Austin, Texas, 10:30 a.m.-noon Saturday, Dec. 1.
Kim Holland, executive director of state affairs for the Blue Cross Blue Shield Association, told CSG she hopes the federal government will be flexible enough to give states the time and opportunity to set up their own exchanges
“A handful of states—four or five—that have been vocal and strong in their opposition will stay in that category,” Graham said. “Another six to 10 states waited for the election results, and while operating a state exchange isn’t what they want to do, they will come on board. These states will not defer to the federal government, so as to retain control of their insurance market and retain control of costs.”
Operation of the exchange is a major cost issue, according to Graham. The federal government has made generous grants to states to build exchanges and will pay for its operation in 2014. In 2015, however, states will bear operating expenses, either directly or, more likely, by passing on fees to exchange consumers. Even for a federally run exchange, costs will fall to the state. Graham pointed out that a state that opts out of operating an exchange would have little control of those costs.
“All health care is local,” said Holland, “and each state needs to evaluate its health care needs uniquely and distinctly. State-operated exchanges will allow states to continue their own endeavors and avoid a one-size-fits-all model. The federal government isn’t going to develop separate models for states.”
Paula Flowers, an attorney and former Tennessee insurance commissioner who advises health care providers on the impact of the Affordable Care Act, said state policymakers need to educate themselves, and quickly.
“This is a key time for legislators to get up to speed on the requirements of the ACA and where the avenues for flexibility are so they can best decide state options,” she said. Flowers will join Graham and a senior official from the U.S. Department of Health and Human Services in the discussion, “What’s Next for Health Exchanges?”
Some state laws and regulations will need to be modified. As states move forward with their exchanges, Flowers said, they may need to form new state agencies or new collaborations, which may be overseen by legislative committees.
Graham agreed that many states will take up health insurance exchanges in their 2013 legislative sessions. Even if the state plans to operate an exchange in partnership with the federal government, it will need to approve authorizing legislation.
“Many states debated the issue in 2012, but given the uncertainty around the Supreme Court decision and the 2012 election, legislation didn’t pass. Now they need to act,” said Graham.
“The great irony is that states most opposed to federal encroachment will see the biggest federal footprint” if they opt out of operating a state health insurance exchange.