States split on plans for health insurance exchanges

With a Dec. 14 deadline on health insurance exchanges, states were required to provide a blueprint of their plans to the Department of Health & Human Services (HHS) for how they will create their state-based health insurance exchanges. About half of the states have decided to surrender control to the federal government to build an exchange for them.

HHS has set deadlines for stages in the development of the online marketplaces to be sure that states will be ready to offer enrollment in health coverage starting in October 2013 and be operational Jan.1, 2014.

To date, 18 states plus the District of Columbia have said that they intend to build their own exchange, while six have decided on a partnership model with the federal government. States participating in a partnership exchange must submit their blueprints by Feb. 15, 2013.

States will have the flexibility to move to state-based exchanges in the future, said Sarabeth Zemel, program manager for the National Academy for State Health Policy.

“The blueprint demonstrates that a state will meet all the legal and operational requirements for the state-based exchange model and operational readiness to engage in its exchange activities,” Zemel said in a Dec. 13 online briefing.

Twenty-four states will opt for a federally facilitated exchange and two, Florida and Utah, have not decided, according to the Kaiser Family Foundation health reform tracker. Utah is considering using its current exchange, which was created previously.

HHS Secretary Kathleen Sebelius had extended the blueprint deadline by one month to accommodate primarily Republican governors, who were waiting until the election outcome to decide whether to move ahead on the exchanges. Many Republican-led states have defaulted to the federally built exchange.

Sebelius announced last week that six states -- Colorado, Connecticut, Maryland, Massachusetts, Oregon and Washington -- had received conditional approval for their state-based health insurance exchange plans. She reiterated, “As both a former governor and state insurance commissioner, I believe states are in the best position to make decisions about their health insurance marketplaces.”

States that are developing their own exchanges must get conditional approval of their detailed plans by Jan. 1, 2013, indicating that it will be operationally ready for open enrollment beginning Oct. 1, 2013. “That means that a state’s IT system and consumer assistance needs to be up and running then,” Zemel said.

For Maryland Lt. Gov. Anthony Brown, who leads the state’s healthcare reform efforts, the conditional approval is an important milestone for the Maryland Health Benefit Exchange. “Our progress has been the result of insurance producers, carriers, third-party administrators, healthcare providers, advocates and consumers coming together to build a marketplace that will best meet the needs of individuals and small businesses throughout Maryland,” said Brown in an announcement.

He cited the cooperation of Maryland’s congressional delegation and the state general assembly “to maximize the Affordable Care Act in order to make Maryland the healthiest state in the nation.”

Gary Cohen, CMS deputy administrator and director of the Center for Consumer Information and Insurance Oversight, has described the federally facilitated exchange, which HHS has contracted with CGI to develop and operate. The federally facilitated exchange aims “to assure that residents of every state will have access to affordable health insurance in 2014,” he said in a Dec. 10 briefing.

The exchange includes an initial application, plan evaluation tools and consumer support, such as a website with chat capability and 24-hour call center through which to compare plans, check eligibility for affordability programs and to enroll in a qualified health plan, Cohen said.

In April, qualified health plans will begin submitting applications to the federal exchange.

“HHS will work with states to preserve traditional responsibilities of state insurance departments when establishing the federally facilitated exchange,” Zemel said. Additionally, HHS will work to harmonize exchange policy with existing state programs and work with state Medicaid programs, either making eligibility determination using state rules or allowing the state agency to make the final determination.

The administration has also proposed a monthly user fee of 3.5 percent of premiums to fund the federally facilitated exchange.

“With the partnership model, states can take on some functions and leave others to the federal government,” Zemel said. A state can perform plan management, which includes tailoring plan choices, selection and plan rates and benefit information, plan monitoring and oversight, and data collection and analysis for quality. Or a state would oversee the consumer assistance function, including managing the navigator program and conducting outreach and education.

HHS would manage the call center and website and written correspondence to support the eligibility and enrollment function, Zemel said.

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