WASHINGTON — With the prospect of outright repeal all but gone, the nation’s health care overhaul is proceeding, and states that once resisted the politically divisive law now must decide how to implement its most innovative aspect: the online health insurance shopping malls known as exchanges.
Beginning next year, the law requires states to establish Internet marketplaces in which individuals can compare and purchase private health insurance or, if eligible, enroll in public Medicaid coverage.
States that want to run their own exchanges without federal involvement have until Friday to notify the Department of Health and Human Services, but they get until Dec. 14 to provide the details.
“We expect that they (the department) will be very flexible with states and try to give them as much leeway as possible, both to move forward with an exchange if they miss the deadlines and also to make any modifications after that deadline,” said Caroline Pearson, the health reform director for Avalere Health, a Washington health care consulting firm. “So I do expect there’ll be a fair amount of flux.”
Small businesses also will use the exchanges to offer their employees a choice of coverage plans at group rates under the law’s Small Business Health Options Program.
Federal tax credits tied to income will help many shoppers pay for coverage on the exchange. Further, competition among insurers and a groundswell of customers are expected to keep premiums in check when enrollment in the exchanges begins next October and coverage takes effect in January 2014.
The law, often referred to as “Obamacare,” requires all Americans to have health insurance in 2014 or pay a fine.
More than 9 million people are expected to get coverage through the exchanges in 2014, and 25 million in 2017, according to Avalere’s projections.
Many states that opposed the health care overhaul didn’t prepare for the exchanges, hoping that a Mitt Romney presidential victory and a Republican takeover of the Senate would deal the law a death blow. But President Barack Obama won and Democrats expanded their Senate majority, injecting it with new strength and forcing resistant states to fall in line.
On Tuesday, Florida Gov. Rick Scott, a Republican critic, said he now wanted to negotiate with the Obama administration, after previously blocking all advance work on an exchange for his state.
“The election is over and President Obama won,” Scott told The Associated Press. “I’m responsible for the families of Florida. ... If I can get to ‘yes,’ I want to get to ‘yes.’”
States may operate and administer their exchanges themselves or in partnership with the HHS.
While the numbers might change, at least 14 states and the District of Columbia will have state-run exchanges, according to Avalere.States that run their own exchanges have the authority to make operational decisions on how they’ll be built, who builds them and what health plans will be featured. In partnership exchanges, states divide operational and management responsibilities with the federal government.
Not every state is moving aggressively.
At least 11 that opposed the health care law probably will end up with federal insurance exchanges run entirely by Washington.Brett Graham, the managing director at Leavitt Partners, which advises Republican-led states on the health care law, said control was “really critical when you start thinking about your individual (state) insurance market.” Otherwise, the federal government regulates the local insurance market. “So you’ve ceded that to them,” he said.But even with the federal government’s new flexibility on deadlines, it may be too late for states such as Florida and Wisconsin to develop state-run systems now.
“They may have waited to the point where they need to start being realistic and quickly move towards other options, so they don’t find themselves in a federally facilitated exchange,” Graham said.
These states may be better served in a partnership exchange, in which they could control decisions on planning and contracting while leaving eligibility and enrollment issues to the federal government, Pearson said.