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States with Least Work on Exchanges Will See Big Benefits Anyway, Study Says

By Jane Norman, CQ HealthBeat Associate Editor

January 23, 2012 -- The uninsured residents in the 15 states that have made the least progress in setting up health benefit exchanges are the ones with the most to gain under the benefits of the health care overhaul, according to study released from the Urban Institute.

The study, financed by the Robert Wood Johnson Foundation, says that 15 states have made little headway on setting up their exchanges and might have to rely on a federal fallback instead. Yet those are states with high rates of uninsured residents, and under the health care law (PL 111-148, PL 111-152), they would see the largest percentage drop in the rate of uninsured residents.

These states "will gain the most from the Medicaid expansion and will receive the most federal subsidy dollars per capita," notes the study. The Medicaid expansion, however, is not dependent on whether a state or the federal government operates the exchange.

Progress around the country on exchanges—meant to be a marketplace for health insurance for individuals and small business—varies widely. But this is a crunch year. States are supposed to demonstrate "significant progress" on their exchanges by Jan. 1, 2013, and have until Jan. 1, 2014, to implement their exchanges though Department of Health and Human Services officials have been stressing flexibility for states that can't make it in time.

The study, by Fredric Blavin, Matthew Buettgens, and Jeremy Roth, divides the states into three groups. The first already has passed state legislation on an exchange or has a governor who has issued an executive order. The second are states whose officials have expressed significant interest in creating a state exchange by passing intent legislation, having legislation pending or receiving an HHS Level One grant for planning.

Then there are the rest, who are resistant to the law. They have Republican governors, GOP-led legislatures, or both. Those states are Alaska, Arkansas, Florida, Georgia, Kansas, Louisiana, Montana, New Hampshire, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Texas and Wyoming.

Nine of the 15 have made some progress by creating an exchange study or planning entity. But in six, legislation was not moved or didn't pass in 2011, said the study.

Yet in those states the percentages of uninsured would be cut in half or more through the health care law. In Louisiana, for example, there would be a 60 percent decrease in the number of uninsured. The same would be true in Arkansas, says the study.

Enrollment in Medicaid or the Children's Health Insurance Program would rise by more than 50 percent in these states compared to 30 percent or less in the other states, the study reports. And spending on uncompensated care would also drop the most.

States considered to have made the most progress are California, Colorado, Connecticut, Hawaii, Indiana, Maryland, Massachusetts, Nevada, Oregon, Rhode Island, Utah, Vermont, Washington and West Virginia, and the District of Columbia.

In the second group are Alabama, Arizona, Delaware, Idaho, Illinois, Iowa, Kentucky, Maine, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New Mexico, New York, North Carolina, Pennsylvania, Tennessee, Virginia and Wisconsin.

Wisconsin's Gov. Scott Walker, however, recently said no work will be done on an exchange in his state until the U.S. Supreme Court rules on the constitutionality of the law, and that the state is giving back $37 million in federal funds allocated for planning its exchange.

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