Raising the stakes on exchanges
Prospects for exchanges seem to defy both extremes
The outlook for the establishment of state-run health insurance exchanges may be neither as rosy as their supporters claim nor as dark as their critics expect. Even as several states recently rejected the insurance marketplaces required by the 2010 U.S. healthcare overhaul, federal regulators laid out a path that will make it easier for states to change their minds and give more time for them to do so. The combined effect of the disparate federal and state actions indicates that state-run exchanges are less likely in the original time frame of 2014 and more likely over a longer period.
Federal officials acted last week to allow a go-slow approach for state-run exchanges. A “draft blueprint” for state exchanges issued May 16 appeared to extend a hard statutory 2015 deadline for state exchanges to attain fiscal self-sufficiency to early 2018. That was the implication of the plan’s announced availability of exchange implementation grants throughout 2014 and for three years to spend money that they could receive up to 2015.
“What that suggests is that a slower rampup is permissible,” said Bruce Caswell, president and general manager of the health services segment for Maximus, a Reston, Va.based government contractor.
The extended time frame, details of which an HHS official said will be clarified in future guidance, came as part of new exchange guidance that emphasized a greater federal role over the next couple of years. For example, the documents established a Nov. 16 deadline for states to submit their plans if choosing to operate their own exchanges or a state-partnership exchange together with HHS. If state plans fall short of the new requirements, then the federal government will run part or all of the exchange until the state is ready to ramp up its own version.
“It makes really clear that the relationship between the states and the federal government is really a long continuum,” said Deborah Bachrach, a healthcare attorney with Manatt, Phelps & Phillips in New
York. Despite the delineation of a possible years- long federal role in running exchanges in states that are either unwilling or unable to operate such insurance marketplaces, the latest guidance leaves important details of the federal exchange unclear. For example, the guidance does not specify whether the federal exchange will be tailored to each state or whether a single federal exchange will serve all states that lack their own versions.
HHS officials have purposely slowed the release of many details of the federal exchange, according to many healthcare policy experts, to subtly encourage states to develop their own exchange.
Some Republicans who strongly oppose the federal law under which the exchanges were authorized have urged states to nonetheless create such exchanges to avoid the imposition of a federal version over which they would have no control.
Ironically, a caveat to the federal-run exchanges revealed in the recent guidance may increase some states’ comfort with them.
The rules specified that states can retain control of eligibility determinations under the federal model. State leaders from across the political spectrum have long viewed their control of Medicaid eligibility determinations as a critical state power, and that led many to seek such control in the federal exchange.
“That’s reflective of some of the concerns that were raised in the original dialogues around the federal exchange,” said Kathleen Nolan, director of state policy and programs for the National Association of Medicaid Directors.
Last week also saw the release of more than $181 million in HHS exchange establishment grants to four states, which brought the total establishment funds issued to $856 million. Although the funding announcement was followed by at least one of the four states, South Dakota, deciding that it would not pursue the creation of an exchange, last week’s guidance reinforced that states can use the federal money for activities that would eventually support the creation of state exchanges. For example, the states can use last week’s funds to upgrade their Medicaid programs’ data exchange capabilities, which is an upgrade that would be necessary if they were creating an exchange.
Federal officials may have little choice but to think long term because few states have acted to create an exchange through enacting the necessary state laws or executive orders. Many states continue to wait for a Supreme Court ruling on the law’s constitutionality before undertaking the creation of an insurance exchange.
Republican Gov. Dennis Daugaard of South Dakota cited the court decision— expected at the end of June—in his announcement regarding the use of the exchange funds. His announcement followed the May 10 veto of legislation authorizing a state-run exchange in New Jersey by Republican Gov. Chris Christie, who similarly cited the court’s pending decision.
Last week also saw a legislative panel in Louisiana defeat exchange-authorizing legislation.
Gov. Chris Christie, seen at a May 16 town hall, recently vetoed legislation to establish an insurance exchange in New Jersey, saying that the future of the Affordable Care Act is uncertain.