25 States Don't Know What Kind of Health Exchange They'll Have

With less than a month before applications to the Centers for Medicare and Medicaid Services (CMS) are due, half of the states still don’t know what kind of health insurance exchange model they’re going to have.
by | October 25, 2012

With less than a month before applications to the Centers for Medicare and Medicaid Services (CMS) are due, half of the states still don’t know what kind of health insurance exchange model they're going to have.

That’s what the Kaiser Family Foundation found in its annual 50-state survey released Thursday. States must submit an application to CMS by Nov. 16 that shows CMS enough to at least grant conditional approval for state plans by Jan. 1, 2013. The exchanges, created by the Affordable Care Act, are supposed to open for enrollment on Oct. 1, 2013 and be fully operational by Jan. 1, 2014.

But 25 states say their exchange model is still undetermined. States can opt for either: a fully state-run exchange; a partnership exchange with CMS taking the lead, but the state still fulfilling some of the functions; or a federal-run exchange. The exchange model is arguably the very first question that states have to answer.

It is important to note that the interviews for the Kaiser survey took place in July and August, so states might have made progress in the interim.

Of the states that have made a decision, 17 say they’ll have a state-based exchange, and eight say they’re going with a federal-run exchange. Only one -- Arkansas -- has settled on the partnership exchange so far.

According to Kaiser, some state officials noted that CMS has said that states could start with a federal exchange and then move to a partnership or state-based model in later years. Others said that a state exchange requires legislative authority—something that undetermined states are unlikely to receive by Nov. 16 if they don’t have it now, though some have floated the idea of a last-minute special session to avoid a federal exchange.

At an IT conference in Baltimore this August, a CMS official acknowledged that the federal government expects to be running up to 35 exchanges during the first year. Kaiser’s findings seem to back up that perception. The Obama administration has awarded more than $1 billion in exchange establishment grants, which states can use to prepare for any of the three exchange models.

Some of the exchange uncertainty could be related to uncertainty about the future of the ACA itself. If President Obama wins re-election, implementation will likely continue as planned. If Mitt Romney takes the White House, he has pledged at times to repeal the law, though he has also hedged that he would keep some of the more popular provisions. His specific stance on the exchanges is unknown, though the Massachusetts health reform law that Romney signed and served as a basis for the ACA created an exchange for the state.

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