After Court Ruling, States Turn to Health Exchanges

Some states are set to pick up the pace on establishing their insurance exchanges, while others could wait for the November election.
by | June 28, 2012
 

So, how is that health insurance exchange coming along? With the U.S. Supreme Court’s decision to uphold the Affordable Care Act (ACA), states must turn their attention back to one of the most labor-intensive elements of the health-care reform law: online insurance marketplaces expected to serve more than 20 million people nationwide starting in 2014. If states don't develop their own, the federal government will do it for them.

Uncertainty over the ACA’s fate stalled some state action on the exchanges. According to the Kaiser Family Foundation, 12 states halted their exchange planning to wait for the Court. Another 27 states continued their development, despite the law’s legal limbo. According to the National Conference of State Legislatures, 11 states have enacted exchange legislation or issued executive orders to establish them, while another 18 states have bills pending. The U.S. Department of Health and Human Services (HHS) has awarded more than $850 million in establishment grants to 34 states to facilitate state planning.

In the aftermath of the Court’s ruling this week, analysts said to expect different reactions from states: Some will push forward with their exchange; others might be inclined to wait until November -- the latest states can submit plans -- to see if President Obama wins reelection. “I do think that it's going to be a mix. Some states may just wait it out,” said Linda Blumberg, health economist and senior fellow at the Urban Institute. “Across the political spectrum, though, there is a strongly held feeling that having input into the design of an exchange is really valued.”

Some states, particularly those that pushed ahead with planning, will be better positioned than others to meet the November deadline for submitting their exchange plans to HHS. Rhode Island (the first state to receive multi-year Level II exchange funding from HHS, worth more than $58 million) hired its exchange director last week and has already issued a request for proposal for its exchange’s digital infrastructure.

“It is a great day to see that the federal committment to join us in this effort is going to be there,” said Lt. Gov. Elizabeth Roberts, who has supervised ACA's implementation in Rhode Island -- which would have moved ahead with an exchange regardless of the Court's ruling. "There has been so much uncertainty. We were committed to a path forward, but that path is much clearer now."

Similarly, Oregon Gov. John Kitzhaber, whose state has received nearly $64 million in establishment grants, was enthusiastic after Thursday's ruling about moving forward with his state's exchange. “Oregon's health transformation initiative is well underway,” Kitzhaber said in a statement.

Other states, however, have some ground to make up. New Jersey Gov. Chris Christie vetoed an exchange bill that passed that state’s Legislature in May, and Assembly Democrats announced shortly after the Court’s ruling that they would reintroduce exchange legislation soon. New Hampshire lawmakers went so far as to pass a bill earlier this month that explicitly prohibits the state from establishing a health exchange.

States that don’t set up their own exchange will have federally-facilitated exchanges, overseen by HHS. In May, the Obama administration detailed what a federal exchange would look like. States could administer some functions (such as certifying insurance plans sold on the marketplace), and HHS also indicated that those states could assume more control of their exchange after 2014, if they so choose.

For states ideologically opposed to the ACA, that left little incentive to develop their own exchange for the time being. “There’s just no reason for us to drop everything right now and invest in an exchange,” Tony Keck, South Carolina’s director of health and human services, told Governing at the time. “We want to spend our time improving health, not being the back office of the insurance industry.”

Thursday’s decision seemed to do little to change that perspective for some top GOP officials. “Wisconsin will not take any action to implement Obamacare,” Wisconsin Gov. Scott Walker, whose state has made almost no effort to develop an exchange, said in a statement. “I am hopeful that political changes in Washington, D.C., later this year ultimately end the implementation of this law at the federal level.”

Some predominantly red states -- while hesitant to develop an exchange without finality from the Court but wary of a federally-run exchange -- have floated the possibility of holding special sessions this fall to establish exchanges if the Court upheld the ACA (as it did). Officials in North Dakota, Tennessee and Virginia confirmed to Governing in April that the idea had circulated within their state capitols.

Virginia Health and Human Services Secretary Bill Hazel told Governing at the time that a special session was likely if the law stood. Gov. Bob McDonnell acknowledged Thursday that his state would reluctantly implement the ACA’s various reforms, including an exchange presumably.

“Virginia will evaluate the steps necessary to comply with the law,” McDonnell said in a statement. "While we have awaited this decision, planners have been working to identify necessary resources and issues to be addressed to ensure Virginia implements this flawed law in the most effective and least costly and burdensome way possible."

It remains to be seen how many other states will take the same route -- or whether they will stay steadfast in opposition to the law.

State Health Insurance Exchanges Map

Governing is tracking each state's implementation of the bill, shown in the map below:

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