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Missouri won't run health insurance exchange by 2014

By David A. Lieb

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JEFFERSON CITY, Mo. (AP) — Gov. Jay Nixon acknowledged Thursday that Missouri will not be able to set up an online marketplace for residents to shop for health insurance as envisioned under the Patient Protection and Affordable Care Act (PPACA).

That means federal officials will take over the task — at least for the near future.

Under PPACA, states must tell the federal government if they want to run their own health insurance exchanges when the online shopping sites are due to open in 2014. If states don’t set up their own sites, the federal government will run one for them.

Nixon said he would prefer Missouri run its own insurance exchange. But that’s not possible, at least not at this point. Voters on Tuesday passed a ballot measure barring the governor from taking steps to establish a state-run insurance exchange without legislative approval. The Legislature has not granted its approval. And it’s not scheduled to be in session until January.

“The only option for Missouri at this time is to indicate that we will be unable to proceed with a state-based exchange absent a change in circumstances,” Nixon said at his first news conference since winning re-election Tuesday. But he added: “Let me be clear that a federally facilitated exchange is not the ideal approach. Regulating the insurance market is a power best left in the hands of the states.”

So far, 13 states have told the U.S. Department of Health and Human Services that they want to run their own health insurance exchanges. The sites are intended to provide individuals and small businesses a way to shop online for insurance policies, similar to what already exists for airline tickets or hotels. The online marketplaces are a key part of the law’s goal of making health insurance more accessible.

Although states must act soon to get federal approval to run their own insurance exchanges in 2014, they are not prevented from deciding in the future that they would like to take over the duties from the federal government. States also have the option of working jointly with the federal government to operate an insurance exchange.

“Most states will take an active role operating their exchange, and we will work with any state to set up an exchange at any time,” said Fabien Levy, a spokesman for the U.S. Department of Health and Human Services.

Newly nominated Senate President Pro Tem Tom Dempsey said Thursday that majority party Republicans plan to discuss whether to implement a state-run insurance exchange — as well as other parts of Obama’s health care law — during a private agenda-setting meeting next week.

The House passed a bill in bipartisan fashion in 2011 that would have created a state-run insurance exchange. But it died in the Senate because of opposition from some Republicans who didn’t want to do anything that could be viewed as endorsing Obama’s health care law. Some of those senators will no longer be in office in 2013. But other opponents remain.

Sen. Brian Nieves, R-Washington, said Thursday that he still opposes the creation of a state-run exchange and also wants to resist a federally run insurance exchange.

“We’re just going to see how far they are willing to push it to determine how far we are going to be willing to push back,” Nieves said. But he didn’t entirely rule out the potential for a state-run insurance exchange in the future.

“It’s a very big if, and an unlikely if, but if we as a state can come together on something we can agree on and we feel like would be good for the people of Missouri, then I’d be willing to discuss it,” Nieves said.

Sen. Rob Schaaf sponsored the voter-approved measure that bars the governor from creating an insurance exchange unless it is specifically authorized by the Legislature or a public referendum. Schaaf said Thursday that he prefers to wait on the outcome of a lawsuit by Oklahoma Attorney General Scott Pruitt before deciding whether Missouri should set up its own insurance exchange.

The Oklahoma lawsuit claims that the federal subsidies for low-income residents who enroll in health plans — and thus also the penalties for business whose employees are receiving the subsidies — should apply only in the case of state-run insurance exchanges. The suit challenges a rule by the Internal Revenue Service that allows the subsidies and employer penalties to also apply when a state’s residents enroll in a federally run exchange.

Schaaf said that if Oklahoma wins its lawsuit, then states have an incentive to let the federal government run the insurance exchanges so that businesses won’t be subject to penalties if their employees get subsidized insurance. But if the IRS rule is upheld, then Schaaf said it Missouri may want to consider creating its own insurance exchange.

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