Consumer Federation of California

The Obama administration will have to build and operate online health insurance markets for more than 30 states, something few expected when the federal health law was approved in 2010.

With today’s deadline hours away, only 17 states and the District of Columbia have proposed running their own insurance markets, also known as exchanges, a key vehicle under the law to expand health coverage to an estimated 23 million people over next four years. A final count was expected to be announced later today.

‘Most analysts did not anticipate that the federal government would end up playing such a big role in the operation of exchanges nationwide,’ said Carolyn Pearson, a director at the Washington, D.C., consulting firm Avalere Health.

When President Barack Obama signed the Affordable Care Act, the option to have the federal government run the state markets was seen as a backstop. Administration officials have repeatedly said they hoped most states would run the markets themselves because they know their insurance markets best.

Most experts thought only states with small populations such as Delaware or Montana would seek federal help. Instead, most will rely on the federal government ‘ including two of the most populous states, Texas and Florida, which together account for nearly 20 percent of nation’s uninsured.  By law, the state exchanges must be approved by the federal government by Jan. 1, begin enrollment next October and have coverage take effect Jan. 1, 2014.

Administration officials say Americans can be assured the markets will be available in every state next year for people to compare and buy coverage. This week, six states ‘ Colorado, Connecticut, Maryland, Massachusetts, Oregon and Washington ‘ were given ‘conditional’ approval for their exchanges.

For consumers, the new exchanges will operate similarly to online travel Internet sites Expedia and Orbitz in helping people compare benefits and prices. But the exchanges will also have broad powers to determine which plans are available and the types of benefits offered. They will also determine who is eligible for federal subsidies as well as Medicaid, the state-federal health insurance program for the poor.

Most Republican-led states have opted against running an exchange, although Idaho and Nevada this week said they would seek approval. Most did little work to prepare to build exchanges over the past two years as they first sought to overturn the health law in the courts and then delayed implementation activities hoping President Obama would lose re-election. Neither occurred.

States that don’t run their own exchange have two options: a federal exchange that needs little state participation or a federal partnership exchange, in which states help by performing certain duties such as providing customer service. States have until Feb. 15 to say whether they intend to seek a federal partnership exchange. Four have done so already, said Gary Cohen, director of the Center for Consumer Information and Insurance Oversight at the Department of Health and Human Services.

‘I don’t envy ‘ [federal regulators] for the job that they have,’ Dennis Smith, the top health official in Wisconsin told a congressional committee Thursday. Wisconsin won’t pursue a state exchange.

‘At the end of the day, you’re trying to connect a buyer to a seller. And the fundamental things required to do that are not yet in place,’ he said.

But Ceci Connolly, managing director at consulting firm PricewaterhouseCoopers, said the work for the administration is the same whether one state or 50 states opt for a federal exchange.  The challenge will be in coordinating that federal exchange with various state Medicaid programs and creating a seamless experience for consumers, who are likely to move back and forth between Medicaid and private insurance, she said

‘It is going to be a sprint for government officials and the industry to be ready by next fall,’ Connolly said.

States planning for state exchanges:

See Health Exchange Map here

California
Colorado
Connecticut
District of Columbia
Hawaii
Idaho
Kentucky
Maryland
Massachusetts
Minnesota
Mississippi
Nevada
New Mexico
New York
Oregon
Rhode Island
Vermont
Washington