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KTVL CBS Channel 10 :: News - Top Stories - States have until Friday to decide on health care exchanges

Thursday, December 13 2012, 05:49 PM CST
States have until Friday to decide on health care exchanges
By Ricardo Alonso-Zaldivar/Associated Press

WASHINGTON (AP) -- Nineteen states have turned down the Obama administration's invitation to run the new health insurance markets that will begin serving millions of uninsured Americans less than a year from now. That puts a huge task on the feds, a defining challenge for President Barack Obama's second term.

Friday is decision day for states to notify Washington if they will set up their own insurance exchanges under the federal health care law. Monitoring by The Associated Press finds a divided nation moving ahead, despite the misgivings of some state officials. Half the states now say they will participate in some way.

Still, drafters of the law did not anticipate that so many states would remain on the sidelines at this late stage. Federal control of the new state markets where individuals, families and small businesses will shop for taxpayer-subsidized private coverage was seen as a failsafe, not the standard for nearly half the country. Critics predict delays.

All of the states refusing are led by Republicans.

On the other side of the ledger, 17 states and Washington, D.C., say they want to set up and run their own markets. The administration has already started granting approvals. Eight other states have indicated they want to pursue a partnership with Washington, and more may do so. Only six remain undecided.

Exchanges are the gateway to the new health care law for individuals and families who buy their own health insurance, as well as for small businesses.

Currently, it's hard to tell what's a good plan or a fair price. You can get turned down if you have a medical problem, charged more if you are older or a woman. The health care law forbids insurers from turning away the sick, limits what they can charge older people and bans gender-based surcharges. It also requires virtually all Americans to get coverage or face fines.

Exchanges are supposed to make picking health insurance like buying an airline ticket from an online travel site like Orbitz or Expedia.

There will be a website, and you'll be able to put in your ZIP code and get a list of available health plans. There will be a section where you can find out if you qualify for subsidies, or for Medicaid. There will be cost calculators to allow you to compare different levels of coverage: platinum, gold, silver and bronze. There will be tools that allow you to see if your doctor or hospital is with a particular plan.

Middle-class consumers will be able to find out if they are eligible for government help with their premiums for private insurance. Initially, nearly 9 of every 10 taking part will get assistance.

Low-income people can use the exchanges to find out whether they are eligible for expanded Medicaid coverage under the law. In addition to deciding how to implement exchanges, states must also decide whether to accept the Medicaid expansion. There's no deadline set for that decision, and most are still weighing options.

Open enrollment for exchange plans starts next Oct. 1, and coverage begins Jan. 1, 2014. Initially around 10 million people are expected to sign up, growing rapidly thereafter. California, New York and Kentucky are among the states that have opted to create their own exchanges. Among those passing are Texas, Georgia and Kansas. Partnership states include Illinois and West Virginia.

Republican governors rejecting state exchanges have cited a variety of reasons. Some say the administration has not provided enough information. Others say there's too much federal regulation. Most have concerns about costs. But some Republican leaders have broken ranks, including governors in Idaho, Nevada and New Mexico, and the insurance commissioner in Mississippi.

In announcing his support for a state exchange this week, Idaho Gov. C.L. "Butch" Otter said, "it would be irresponsible of me to simply abandon the field to federal bureaucrats. In the face of uncertainty we must assert our independence and our commitment to self-determination, while fulfilling our responsibility to the rule of law."

Indeed, exchanges have a Republican pedigree. The idea was pioneered in Massachusetts under then-Gov. Mitt Romney's health care overhaul.

"All this is full of irony," said consultant Jon Kingsdale, who founded the Massachusetts exchange for Romney. "If you had asked many of those (Republican) governors four years ago before this got politicized, it would have been a no-brainer: 'We want the states to do it.'"

The health care law increased the power of the federal government, but states that run their own exchanges retain important roles overseeing insurance plans, addressing consumer issues and coordinating between the new marketplace and their Medicaid plans. That last item may be the most important, since Medicaid is a major component of state budgets.

Critics of the law believe the Obama administration will be overwhelmed trying to set up so many exchanges in states that are hostile to the idea. Some say the president may have to accept delays, perhaps in the face-saving context of budget negotiations where a delay would count as savings. Publicly, administration officials are adamant that won't happen, and independent observers are starting to believe them.

"It would be politically unwise for the president to delay the start of these benefits," said Dan Mendelson, president of Avalere Health, a market analysis firm. "If this is going to be a legacy item, he's got to move forward."

The key to that will be something called the federal exchange, the fallback, which is on a tight development schedule overseen by Health and Human Services Secretary Kathleen Sebelius.

The government has awarded two big technology contracts for exchanges. Virginia-based CGI Federal Inc. is building the federal exchange. Maryland-based Quality Software Services Inc. is building what's called the federal data services hub, an electronic back office that will be used by the federal exchange and state exchanges to verify identity, income, citizenship and legal residence.

Estimated price tag for the federal exchange: at least $860 million.

"We are all keenly aware that open enrollment is coming quickly," said Gary Cohen, who heads the HHS office overseeing the rollout. "And we will be ready to open our doors."

Associated Press writer John Miller in Boise, Idaho, contributed to this report.

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States have until Friday to decide on health care exchanges

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