Many states won’t run own health exchanges

Some governors say Washington slow to give directions.

WASHINGTON — The Obama administration said Friday that more than half the states had rejected its pleas to set up their own health insurance exchanges, dealing a setback to President Barack Obama’s hopes that Republicans would join the White House.

Friday was the deadline for states to notify the federal government of their plans, and administration officials had been hoping that Obama’s re-election would overcome resistance to the new health care law.

Federal officials said they knew of 17 states that intended to run their own exchanges, as Congress intended.

Two of those states, New York and Kentucky, won conditional federal approval Friday for their plans to create and run state-based exchanges. Kathleen Sebelius, the secretary of health and human services, also approved an application from the District of Columbia.

In seeking federal money, New York estimated that 1 million people could obtain insurance through its exchange. In addition, said Josh Vlasto, a spokesman for Gov. Andrew M. Cuomo, the exchange will lower the cost of coverage for many New York businesses.

But in Virginia, after more than a year of planning and research, Gov. Bob McDonnell said his state would not operate its own exchange.

“Despite repeated requests for information, we have not had any clear direction or answers from Washington until recent days,” McDonnell said.

On Monday, Sebelius gave preliminary approval to state-based exchanges being established by Colorado, Connecticut, Maryland, Massachusetts, Oregon and Washington.

The exchanges are online supermarkets where people can shop for private health insurance and obtain federal subsidies to help defray the cost. The Congressional Budget Office has estimated that 25 million people will eventually receive coverage through the exchanges.

Federal officials and federal contractors will set up and run the exchange in any state that is unable or unwilling to do so.

Gary M. Cohen, a federal health official, said the administration “has encouraged states to establish their own exchanges.” But, he added, consumers will have access to affordable health insurance in all states, regardless of who is in charge of the exchange.

The concept of an exchange is simple: Competition will drive down prices. But operating an exchange is an immense technical challenge requiring sophisticated information technology to digest and display huge amounts of data on the costs and benefits of various insurance plans.