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Federal Exchange to Handle States with Most Uninsured, Data Shows

By John Reichard, CQ HealthBeat Editor

February 28, 2013 -- At a time when federal officials are struggling to find the money to implement the health care law, it's clear from new data that it will be up to them to run the new exchange marketplaces in the states with the most uninsured Americans.

New data from Enroll America, established to boost coverage levels under the health law, show that 13 states account for two-thirds of the uninsured population. And an analysis of that data reveals that 9 of those 13 states will rely on the federally facilitated exchange to direct the uninsured to the appropriate coverage, offer them a menu of plans, determine their eligibility for subsidies, and handle enrollment, which is scheduled to begin on Oct. 1.

Of the 13 states, only California and New York are fully committed enough to carrying out the health care law (PL 111-148, PL 111-152) by setting up their own exchanges. Of the remaining 11, two—Michigan and Illinois—say they'll partner with the federal government on a marketplace. The remaining nine will rely on the federal government. They are: Virginia, Arizona, New Jersey, Pennsylvania, Ohio, North Carolina, Georgia, Florida, and Texas.

The Centers for Medicare and Medicaid Services has never revealed its budget for setting up the federally facilitated exchange. That has led to skepticism on the part of some analysts that CMS has the resources to mount much more than a bare-bones effort. But Gary Cohen, the director of the Center for Consumer Information and Insurance Oversight, recently assured Senate Finance Committee Chairman Max Baucus, D-Mont., that the implementation effort is on track.

Earlier this week, however, the White House Office of Management and Budget requested a $949 million increase in the CMS administrative budget, an indication it may be seriously underfunded. It did so in a list of fiscal 2013 spending changes it wants Congress to make in the next stopgap spending bill to keep the federal government going after the current measure expires at the end of March.

Under current law, the CMS administrative budget is in line for a sharp decrease during the rest of fiscal 2013, not the increase the agency wants. The CMS is supposed to cut the equivalent of 5 percent of its budget for the entire fiscal year, but because it must do so over 7 months not 12, the cut is around 9 percent. The reduction is part of the automatic spending cuts under the sequester provision of the budget control law (PL 112-25).

Medicaid expansion and the uninsured

The Enroll America data also show that five of the 13 states with the most uninsured residents do not plan to expand their Medicaid programs as of Jan. 1. They are Georgia, North Carolina, Virginia, Pennsylvania, and Texas.

Of that group, Virginia has signaled the possibility it will expand in mid-2014 but that's far from certain. The eight of the 13 whose governors are moving to expand Medicaid are: California, New Mexico, Florida, New Jersey, New York, Michigan, Illinois, and Arizona.

Ten million of the uninsured live in the top ten metro areas. Of these, seven are in states—and the District of Columbia—that are working to expand Medicaid. Three are not. The seven are: Los Angeles, with 2.8 million uninsured; New York City, 1.97 million; Chicago, 1.05 million; Riverside, Calif.,721,000; Miami, 632,000; Phoenix, 565,000; and Washington, D.C., 542,000. The three not in an expansion state: Dallas-Fort Worth, 1.12 million; Houston, 1.12 million; and Atlanta, 861,000.

Some states moving toward expansion may not actually do so. For example, Florida's governor Rick Scott favors expansion but the legislature may block him. And some states are still wrestling with whether to expand, even as the governors have spoken out against expansion. Pennsylvania and Indiana fall into that category.

The federal exchange will have some heavy lifting to do in many of the metro areas with the most uninsured. For example, it will have to serve five of the top ten with the most uninsured: Dallas-Fort Worth, Houston, Atlanta, Miami, and Phoenix. Enroll America data also show that 21 million of the uninsured live in the top 50 metro areas. Of these 50, 30 will be served by the federal exchange.

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