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On Exchanges: Deadlines Loom as Republican States Debate How to Proceed

By Jane Norman, CQ HealthBeat Associate Editor

September 14, 2012 -- Even in Republican-led states that were part of the suit against the health care law, discussion and debate about how and whether to establish a health insurance exchange continues to consume insurance commissioners, lawmakers, governors, consumers, and the insurance industry.

But whether state-based exchanges can be set up in time to roll into operation in 2014 is still in doubt.

One example is in Kansas, where Insurance Commissioner Sandy Praeger has solicited recommendations on which essential health benefits should be in the exchange, but GOP Gov. Sam Brownback is refusing to take any action pending the results of the November elections, according to news reports. Republican presidential nominee Mitt Romney has vowed to work to repeal most of the health care law (PL 111-148, PL 111-152) if he is elected.

"All of this really hinges on the election Nov. 6," Praeger, a prominent former president of the National Association of Insurance Commissioners, said at a recent public forum, according to the Topeka Capital-Journal.

A new Urban Institute report on exchange activities in 10 states whose leaders have varying political affiliations says all are making an effort to hear from stakeholders and all would ideally prefer a state-based exchange, but "many state policy environments remain politically contentious." States that have not passed certain milestones by now won't have state exchanges in time, says the report by Linda J. Blumberg and Shanna Rifkin.

The analysis looked at Alabama, Colorado, Maryland, Michigan, Minnesota, New Mexico, New York, Oregon, Rhode Island, and Virginia. Five have exchanges in place and five don't. In three states, legislation was passed creating the exchange and in two the governors issued executive orders.

Among those states that the institute looked at, Virginia—one of the leaders in challenging the health care law in court—provided an "interesting example" of what's happened with an exchange, the report said. A bill enacted in April 2011 expressed the intent to build a state-based exchange, but it didn't specifically establish the exchange and state legislators didn't vote on it this year. It's possible the governor could issue an executive order to establish an exchange but that hasn't happened yet, said the report.

"While states are making progress, many essential design decisions have yet to be made in most of the states studied," said the report. That includes definitions of essential health benefits, consumer outreach campaigns and how to collect and manage data, the report said, Maryland and Oregon have made the most progress in this area.

In the 10 states studied, policy makers, staff members, consumer advocates, and others are highly engaged in exchange policy discussions, the report said.

"There was also a strong sense across the political spectrum that a state-run exchange was preferable to a federally run one," the report added, even among those states opposed to the law.

"However, many state policy environments remain politically contentious, and progress in exchange development has been slow for some of them as a result," the report said.

States that have not yet contracted with an IT vendor to develop exchange and Medicaid systems, or set up an exchange entity and hired staff, or created a process for making central design decisions "are unlikely" to be able to set up a state exchange by late 2013, when enrollment for 2014 is to begin, the report said.

Those that aren't ready in time can work in partnership with the federal government in setting up an exchange, the authors noted. The report was underwritten by the Robert Wood Johnson Foundation.

In other exchange developments this week:

  • The Salt Lake Tribune reported that hackers broke into the Web portal for the Utah health insurance exchange system, and it wasn't operating for 10 days. No personal information was compromised but words on the site were garbled and headlines were blurred like an attack of graffiti, the newspaper said. Utah had an exchange in operation prior to the passage of the health care law.
  • Mississippi Insurance Commissioner Mike Chaney, a Republican, said at a meeting that a state exchange where "we can set the rules" will be more effective for Mississippi than a federally run exchange, the Greenwood, Miss., Commonwealth reported. Chaney also said that an insurance exchange is "not a new idea" and "not a Democrat or Republican idea," the newspaper said. Mississippi leaders have been strongly resisted the health care law.
  • Wyofile, a Wyoming nonprofit online publication, said state lawmakers are calling it a "near certainty" that Wyoming will fail to meet deadlines and will have to have a federally run exchange.
  • The state of West Virginia will pay health care "rock star" Jonathan Gruber $121,500 to look at health insurance in the state as West Virginia studies how to set up an exchange and whether to expand its Medicaid program, the Charleston Daily Mail reported. Gruber, a professor of economics at Massachusetts Institute of Technology, was a key adviser to the Obama administration in developing of the health overhaul.

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