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Exchanges: New grants are in but verdict is out on establishing state systems

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U.S. Health and Human Services (HHS) Secretary Kathleen Sebelius today awarded a new round of Affordable Insurance Exchange Establishment Grants to Arkansas, Colorado, Kentucky, Massachusetts, Minnesota and the District of Columbia amid turbulent times in many states as they set up exchanges.

All but one of these states received Level One Exchange Establishment Grants—one-year grants awarded to states to build exchanges. The District of Columbia received a Level Two Exchange Establishment Grant—a multi-year grant awarded to states further along in building their exchanges.

Under the PPACA, health care exchanges are supposed to begin operating in 2014, with open enrollment beginning a year from Oct. 1, 2012.

However, many states that passed legislation early and are constantly working on the build out, like California—the first to pass legislation and has an exchange board established—still acknowledge exchange-building is a formidable task.

Meanwhile, feuds and confusion in other states, coupled with Republican skepticism over the Obama health act and state insurance regulatory energy to all, collide as governors figure out whether they should wait until after the general elections to roll up their sleeves on the exchange build outs.

For example, in today’s grant-recipient Kentucky, Democratic legislators walked out of a debate last week when fellow committee Republicans tried to declare the governor’s executive order establishing the health care exchange illegal, Kentucky Public Radio (KPR) reported.

The Kentucky GOP legislators said that the state legislature should be the one to have given approval to create the exchange, based on state law.

And in Minnesota, the Democratic insurance regulator there, Commerce Commissioner Mike Rothman, and Gov. Mark Dayton have been setting up an exchange without the legislature passing any exchange statute, ultimately resulting in an agent-commissioner feud that led to an about-switch in authority when Dayton removed the exchange’s work product from Rothman and gave it to another state agency. 

Late starts in decisions to go it alone or partner with the federal government in a federally facilitated exchange also mean that much work has yet to be done, with deadlines looming for all.

Agent and industry groups, like the National Association of Health Underwriters (NAHU), join some states in protesting that their work is further hampered by a lack of finalized rules from HHS on so many elements. They say it is unclear how to proceed in the design of products, in organizing workforces and the like.

Earlier this month Wyoming Republican Gov. Matt Mead announced in a press conference that his state would not be notifying HHS by the Nov. 16 exchange blueprint deadline of its plans for establishing an exchange because it could not decide on its exchange plan—the state lacked crucial information needed make a decision, according to a write-up by McKenna Long & Aldridge LLP and news outlets. Mead spoke about unanswered questions and said that he won’t make any decisions on even how to proceed until after the state legislature adjourns in March, past critical deadlines, a Huffington Post piece reports. 

Pennsylvania’s Insurance Commissioner Michael Consedine struck much the same note in his criticism of HHS and its lack of clarity and its unanswered responses to questions during his Congressional testimony Sept. 12.

Pennsylvania still lacks “clear direction and the flexibility promised us has not materialized, something that at this point poses a significant barrier to our ability to make informed decision on issues that could impact the lives of millions of Pennsylvanians,” Consedine testified

Idaho’s insurance director Bill Deal expressed concern for a federally facilitated exchange barring the department’s future authority to regulate the health care industry in his state but also acknowledged a private-public hybrid version wouldn’t meet muster, either, according to the McKenna summary.

In Nebraska, confusion reigns, as well.

Nebraska Republican Gov. Dave Heineman has expressed doubt that the state would really retain that much control over its own exchange, even if it were state run, reportedly stated at a hearing. “We can’t make one single decision without getting approval from the federal government,” according to McKenna Long’s write-up. However, as it points out, exchange planning continues under the director of insurance with a draft RFP written for the all-important—and expensive—exchange IT system.

The exchanges are to be one-stop marketplaces that will provide access to quality, affordable private health insurance choices similar to those offered to members of Congress. 

Consumers in every state will be able to buy insurance from qualified health plans directly through these marketplaces and may be eligible for tax credits to help pay for their health insurance. 

“States continue to make progress toward building exchanges that work best for their residents,” Secretary Sebelius said. “The resources announced today will ensure states have the assistance they need to continue moving forward.” These competitive marketplaces promote competition in the insurance marketplace and provide consumers with more insurance choices.

HHS reports that a total of 49 states, the District of Columbia, plus four territories have received grants to begin planning their Exchanges, and 34 states and the District of Columbia have received grants to begin building their exchanges. The latest reports say 13 governors have signaled they would be setting up their own exchanges.

HHS hasn’t delayed any of the implementation deadlines but it has extended the grant timing and given notice that states that begin as a federal exchange or partnership can move to a state-run platform over time.

For a detailed breakdown of exchange grant awards made to states, including summaries of how states plan on using the awards announced today, see HHS’s exchange factsheet

See also: Where states stand on implementing PPACA


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