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Interest Persists in State Health Law Exchanges, Despite Start-Up Hitches

By Kerry Young, CQ HealthBeat Associate Editor

August 15, 2014 -- The technical and administrative woes associated with some of the new health insurance exchanges aren't discouraging state legislators from pressing for the creation of more of the marketplaces, according to a survey.

Bills were introduced in at least 14 states proposing to shift administration of the health law marketplaces from federal to local control, according to the National Conference of State Legislatures.

These measures were brought forward amid reports of significant technical problems in states including Oregon and Maryland that designed their own exchanges but then had to seek outside help. While none of the health exchange bills cited became law, the New Jersey Senate passed a resolution in June to create a six-member task force to study the implementation of its health exchange and recommend whether state government should have a greater role.

The health exchanges are a critical part of coverage expansion under the 2010 health law (PL 111-148, PL 111-152) and most of the bills cited were offered by Democrats.

More than 8 million people in the United States selected a health insurance plan through state and federal marketplaces during an open enrollment period than ended this spring. The process was often by marked by chaos, with would-be purchasers facing long wait times and confusion. Several Republican-led congressional committees have delved into the mistakes made in setting up state websites and the federal counterpart, While there has been bipartisan interest in examining missteps, a sharp partisan split remains over the basic worthiness of the government-assisted insurance purchases.

"Obamacare exchanges have been a miserable failure across the country, reducing consumers' access to quality healthcare and increasing costs," said New Jersey state Sen. Michael Doherty, explaining his opposition to the June resolution creating a new task force. "New Jersey has been wise so far in rejecting the establishment of Obamacare exchanges."

Oregon and Nevada have moved away from operating their own exchanges and plan to use, noted the legislatures group report said. Yet Massachusetts on Aug. 8 announced that it had dropped a contingency plan to join the federal exchange and would instead work with software contractor hCentive to prepare for the next enrollment season, which begins in November.

Some states may revisit the idea of operating their own exchanges due to political shifts, especially if the existing systems over time prove to be more stable. In New Jersey, Republican Gov. Chris Christie in 2012 vetoed Democratic legislation meant to create a state exchange.

The Montreal-based contractor CGI Inc. has been cited in connection with flaws with and also is being transitioned out of work on the Massachusetts exchange. But the firm continues to do work for what it calls "fully-functioning" state exchanges in Colorado, California, Kentucky and Hawaii.

Beyond New Jersey, lawmakers in Arizona, Georgia, Illinois, Iowa, Indiana, Maine, New Hampshire, North Carolina, Ohio, Oklahoma, Pennsylvania, Virginia, and Wisconsin have introduced measures this year exploring a move toward state-based exchanges, according to the report. These bills were all brought forward before a court challenge raised concern that people living in states that don't run their own exchanges possibly could lose access to federal subsidies for insurance.

Until there is more clarity on the legality of the subsidies, there may be little change in the divide over the exchanges, said Sara Rosenbaum, a professor of health policy at George Washington University.

"We are not seeing any states, at least in advance of the Halbig decision, moving from a federal to a state-based exchange," she said. "You may be seeing states that actually have established their own exchanges use the federal platform."

The legal status of such hybrid arrangement will need to be clarified if some exchange subsidies are struck down, she said.

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