9. Health Insurance Exchanges
States must establish health insurance exchanges, a major piece of the federal health reform bill, to provide a marketplace for consumers to compare and purchase health insurance plans, by Jan. 1, 2014.
Some have likened them to a Travelocity for health insurance.
If states don’t have their exchanges up and running by the deadline, the federal government can step in. The exchanges have five core functions: consumer assistance, plan management, eligibility, enrollment and financial management.
Secretary Kathleen Sebelius and other Department of Health and Human Services officials took to the road earlier this year to meet with state officials. After public hearings on proposed regulations, a new partnership model emerged from the Department of Health and Human Services that would allow states and the federal government to run parts of the exchange.
Under the three proposed partnership options, states could choose to operate the exchanges' plan management functions, selected consumer assistance functions or both.
More than half the states had legislative activity around health insurance exchanges in 2011 according to the tracking of the Center on Budget and Policy Priorities. Ten states—California, Colorado, Connecticut, Hawaii, Maryland, Nevada, Oregon, Vermont, Washington and West Virginia—passed legislation. Eight states—Illinois, Maine, Mississippi, Montana, North Dakota, Utah, Virginia and Wyoming—passed legislation indicating their intent to study or form an exchange. State bills, both passed and proposed, addressed such issues as governance and conflict of interest standards for governing boards.
Dave Chandra, senior policy analyst at the Center for Budget and Policy Priorities, predicted many legislatures will take up the issue of health insurance exchanges again in 2012. Legislation in 16 states failed in 2011 and another 11 states did not consider exchange legislation.
“Stakeholder groups are convening in many states to negotiate differences between executive and legislative leaders,” he said.
Anne Gauthier, senior program director at the National Academy for State Health Policy, pointed out that states don’t necessarily need detailed legislation at first “as long as basic authority is established.”
Meanwhile federal grant assistance is flowing to states to assist in the planning and implementation of health insurance exchanges. All states received $1 million planning grants in 2010. Minnesota and Alaska opted out of the planning grants, although Alaska later accepted the funds.
Since 2010, states have been invited to apply for funds to move toward implementation. In high profile moves, Oklahoma Gov. Mary Fallin and Kansas Gov. Sam Brownback, respectively, rejected $54.6 million and $31.5 million approved grants. Fallin said Oklahoma would use state and private money to establish its own exchange. Kaiser Health News reported Brownback cited the federal government’s debt obligations and said he was returning the money because of doubts that Washington, D.C., would be able to maintain its promised future payments. Gov. Haley Barbour of Mississippi has accepted federal grant funds, but has pledged to develop an exchange that meets Mississippi’s own needs.
“June 2012 is the last opportunity for states to apply for level two grant funding to implement exchanges, but to qualify states must show they have the legal authority to run exchanges,” Chandra told CSG.
“While legislation is the most common way to create that authority, many states are looking at non-legislative routes because of failure to pass legislation or the opportunity to do so is too far in the future,” he said.
For instance, Rhode Island Gov. Lincoln D. Chafee issued an executive order in September establishing a state health insurance exchange, after enabling legislation failed during the 2011 session.
While some state policymakers may be inclined to wait and see what happens when the U.S. Supreme Court takes up the Affordable Care Act, which seems probable for summer 2012, Chandra warned, “If a state waits too long, it may give up the opportunity to run its own exchange.”
On the other hand, National Academy for State Health Policy’s Gauthier told CSG, “career state staff have been working on the state planning grants and will be in a position to get going on implementation when the political winds shift. “
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