States must give detailed information to the federal government by November 16 – just 10 days after the 2012 presidential election – on how they intend to run their online insurance marketplaces, according to Kaiser Health News. States that miss the deadline — or can’t operate their own marketplaces – will have it done for them by the federal government, starting in January 2014.
The marketplaces, which are mandated by the Patient Protection and Affordable Care Act (ACA), are designed to increase competition among insurers and make coverage more affordable. States can opt to run the exchanges, perform limited services, or yield control to the federal government. The Department of Health & Human Services (HHS) “will seek to harmonize…policies with existing state programs and laws wherever possible.” Although the guidance does not state whether there will be a governing board overseeing the federal exchanges, it does say the federally-overseen marketplaces will accept any insurer that meets the basic requirements. Consumer groups, such as the American Cancer Society Cancer Action Network, wanted the federal government to be more selective, in hopes that it would make insurers compete more on pricing and quality measures.
Steve Larsen, the federal official overseeing the federal exchange creation, said the initial approach will be an open marketplace, although in the future, other options may be explored. States that operate their own exchanges are free to choose whichever model they prefer. While many states are moving forward – 34 have received federal grants to fund planning efforts – others are moving slowly or not at all. Six states — Illinois, Nevada, Oregon, South Dakota, Tennessee and Washington – recently received additional grants totaling more than $181 million.
Officials in some state say they are holding back pending the Supreme Court’s decision on the constitutionality of the ACA. The court could uphold the entire law, strike it down entirely or eliminate some parts of it. Other state lawmakers have said they want to hold off on creating marketplaces until after the November election. Larsen reiterated the government’s stance that the court will uphold the law and that President Obama will be re-elected, noting that “states should turn their attention to moving forward.”
The ACA requires states to establish exchanges that offer federally subsidized health coverage to an estimated 16 million people who currently lack healthcare insurance. The exchanges let consumers purchase their insurance from an easily readable menu of competing plans, at premiums set on a sliding scale according to the buyer’s income.
“What this shows is that states are making real progress in delivering quality, affordable health coverage to their residents and they want to be up and running by January 2014,” said Kathleen Sebelius, HHS Secretary. She said that 34 states — including some that want the ACA overturned — and the District of Columbia have accepted federal grant money to help establish the insurance exchanges. Approximately 15 states have moved to establish exchanges, either through legislation or executive order.
HHS also released guidelines for helping states that might not be able to offer full exchange services by 2014 and for establishing federal exchanges in states that refuse to participate. According to officials, the administration will partner with state governments in two realms: certifying health insurance providers for the exchanges and helping consumers apply for coverage and enroll in the chosen plan.
Karen Ignani, President of America’s Health Insurance Plans, is taking a wait-and-see attitude. According to Ignani, “Exchanges work best when they are true marketplaces that maximize choice and competition so that individuals, families, and small businesses can purchase plans that are right for them. States are in the best position to establish exchanges because they have the experience and local-market knowledge to meet the consumers’ needs. If a state chooses not to establish its own exchange, any exchange that is implemented should seek to preserve consumer choice and avoid regulatory duplication that will add complexity and increase costs for consumers. We appreciate that the Department has prioritized minimizing administrative burdens, encouraging choice, and preserving the states’ traditional role of regulating health insurance as these exchanges are developed. Allowing all health plans that meet new quality and performance standards to offer coverage in an exchange will help ensure competition and preserve consumer choice. Moreover, we agree that exchanges should be developed with input from all stakeholders to ensure they are able to provide individuals, families, and small businesses with the most accurate and up-to-date information about all of their coverage options.”