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White House Report Touts Exchange Progress

By Jane Norman, CQ HealthBeat Associate Editor

January 18, 2012 -- The Obama administration issued a report recently saying that 28 states and the District of Columbia are "on their way" toward establishing the health benefits exchanges that will serve as marketplaces for individual and small-business policies once the health care law is fully implemented.

The path toward setting up the exchanges has been rocky as state lawmakers and governors battle over how they should be constructed and in some Republican-led states, whether states should move ahead on them at all.

Wisconsin Gov. Scott Walker recently announced that his state will hold off on exchange implementation until the Supreme Court rules on the health care law in March. In Arkansas, as the White House report notes, the legislature blocked an exchange but the Democratic governor has announced his plans to move ahead.

But the report stresses the progress that has been made as many legislatures convene for their 2012 sessions and exchanges are again a topic. In addition, as attention focuses increasingly on a constitutional challenge to the health care law pending before the Supreme Court, it shows how far ahead implementation has moved and how even Republicans are taking part.

In a written statement, White House Deputy Chief of Staff Nancy-Ann DeParle says that the administration is working in partnership with state leaders across the country to ensure that citizens in every state have access "to an exchange and the same kinds of insurance choices as members of Congress."

The report also documents the grant money sent out to states for planning activities and for development of information technology.

The health care law (PL 111-148, PL 111-152) says that the federal government will run an exchange in a state that does not establish one and that exchanges are supposed to be fully certified by Jan. 1, 2013.

But the administration has not seemed eager to take the route of commandeering exchange operation and instead has spelled out to states ways in which exchanges can be federally facilitated or run in partnership with the federal government. States can also try out exchanges on a test basis and put them in place after 2014, when the law will be fully implemented.

Administration officials who would not be identified for the record also held a telephone background briefing with reporters in connection with the report. Asked if the report's statement that 28 states are moving ahead means that 22 states will have federal participation in their exchanges, an administration official said that "it's premature at this point to draw a conclusion" that will be the outcome.

"We think there will be more. We have a set of pending applications for another round of establishment grants. If all of those were approved we'd be well over 30 states," the official said, though the official wouldn't specify how many are pending.

Congressional Republicans later pushed back at the White House report, noting that the 28 states all have accepted $1 million planning and establishment grants but that doesn't necessarily mean those states are actively pursuing exchanges or will be able to meet the law's deadlines for setting them up.

In addition, Republicans said, the federal government has not yet finalized the regulations that states need to shape their exchanges and so there's little certainty for the states as they continue their work. They cited proposals on establishment of exchanges, reinsurance and risk corridors, Medicaid and premium tax credits.

In its report, the White House offers profiles of work on exchanges in 10 states, including some that are parties to the lawsuit challenging the health care law and with Republican leaders.

In Alabama, for example, the Republican governor Robert Bentley, a physician, has issued an executive order that created the Alabama Health Insurance Exchange Study Commission in June, which held five meetings and issued a report in December. Alabama also has received an exchange establishment grant and state legislators are expected to take up a measure to establish an exchange.

In addition, the report says, with the beginning of the new year, states are moving ahead on exchanges, including a vote in the New Hampshire state senate and planning in Alaska.

The report also gives a rundown on how the government is moving ahead with the federally facilitated exchanges - some guidance already has been issued to states by the Department of Health and Human Services and more will be coming. It promises that HHS has the capacity to ensure that every American will be able to purchase health insurance as of Jan. 1, 2014, and points out that HHS last fall issued contracts for information technology, financial management and marketing.

The agency has completed work on important IT processes and business requirements for such exchanges, and is developing working groups with state insurance commissioners and other officials to coordinate rules and systems in each state for their exchange operations, the report says.

Officials on the conference call said that money for operation of the exchanges is coming from $1 billion appropriated by Congress.

They also said that the final exchange regulations will spell out the minimum functions that must be done in both the state and federal-based exchanges. The official did not say when the final rule might come out.

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