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By Carla Anderson
Updated December 5, 2012
Radio, blogs and newspapers are suddenly full of stories about health insurance exchanges. The Affordable Care Act (ACA), passed in March 2010, called for the creation of an exchange in each state – so the idea isn't exactly breaking news. The reason you're hearing so much about exchanges – also referred to as health insurance marketplaces – is that they've become the latest battleground in the fight over the Affordable Care Act – and deadlines are approaching.
Opponents haven't stopped fighting the ACA since its passage. The U.S. House has voted 33 times to repeal or defund all or parts of the law. None of these efforts gained traction with Democrats who controlled the Senate.
Twenty-six states joined a federal lawsuit trying to overturn the ACA, but the Supreme Court upheld all but one of the challenged provisions. Many citizens voted for Mitt Romney hoping he would overturn the law, but President Obama was re-elected. With all of these avenues blocked, some states continue to resist ACA by refusing to act on health insurance exchanges.
Exchange opponents say the federal government hasn't provided enough guidance, that exchanges will cost too much, and that states won't have any meaningful control of the exchanges.
The U.S. Department of Health and Human Services (HHS) originally gave states until Nov. 16, 2012, to decide on an exchange model:
Just before the original deadline, HHS announced extensions. Any state that intends to run its own exchange had until Dec. 14, 2014 to submit a blueprint, while states interested in state-federal partnerships have until Feb. 15, 2013 to submit their blueprints.
HHS says the extensions were a response to states that had requested more time. In fact, the Republican Governors Association wrote to President Obama to request more time and more information.
Healthcare reform skeptics say the extensions are a desperate move. They charge the federal government is alarmed at the number of states foregoing state-run exchanges and that the government can't get technological infrastructure to support so many states in place by Oct. 1, 2013. That's when exchanges are to begin enrolling consumers.
For most states, the extensions don't matter. About 75 percent of states officially announced their exchange model decision on or before Nov. 16. States began weighing the decision and pursuing a course of action - or inaction - long ago. For most states yet to announce a decision, the model they ultimately select will likely be predicated on the political environment in the state over the past couple years, not on having a few extra weeks.
Early adopters – A handful of states jumped into exchange planning shortly after the ACA passed. California was the first state to pass legislation authorizing an exchange – doing so in September 2010. Colorado, Connecticut, Hawaii, Maryland, Oregon, Vermont and Washington all authorized state-run exchanges in 2011. Massachusetts and Utah were operating exchange prior to ACA, and both are moving ahead on changes needed to comply with ACA requirements.
States that moved quickly to establish exchanges are generally blue states. Obama carried all but Utah in both 2008 and 2012, and many of the early adopters have Democratic governors.
The early adopters have made much progress toward establishing state-run exchanges. They have named boards of directors, established advisory groups and held public forums to gather input, evaluated and began upgrading information systems, engaged consulting firms to help with IT projects and outreach activities, examined funding mechanisms for ongoing operations, and many other tasks.
Pragmatists – A number of states took a pragmatic approach. Despite the uncertainty about the ACA in general and exchange requirements in particular, the pragmatists did enough work to keep their options open.
In some cases, legislatures failed to authorize exchanges, yet federal grants were accepted and spent as executive branches authorized significant planning work to proceed. Minnesota is a good example. While the Republican-controlled legislature failed to authorize an exchange in 2011 or 2012, Democratic Gov. Mark Dayton's administration has made quiet, extensive progress on an exchange.
Dayton used an executive order to appoint a task force that has been active since October 2011. Minnesota has been awarded about $75 million in federal grants. On Nov. 16, Minnesota submitted a letter of intent and blueprint for a state-run exchange. The November elections returned both the House and the Senate to Democrats, who are expected to pass exchange legislation in 2013.
Some states remain opposed to the ACA, but have taken the position that if the state must have a health insurance exchange, it is better for the state to run it than the federal government. Arizona is an example. Republican Gov. Jan Brewer is on record opposing the ACA, but established the Office of Health Insurance Exchange within her administration and explored legal options to establish a state-run exchange absent legislative authorization. Arizona has yet to announce its final decision on an exchange.
Passive resisters – A few Republican-controlled states took the approach opposite to that of Arizona: they are opposed to the ACA and have done little or nothing to establish an exchange. States in this category include Idaho, Pennsylvania, South Dakota and Wyoming. South Dakota and Wyoming both opted for federally run exchange in the latter half of 2012. While Idaho and Pennsylvania have yet to announce formal decisions, it is doubtful they can be ready to operate a state-run exchange by Oct. 1, 2013.
Active resisters – A number of states – mostly led by Republican governors adamantly opposed to the ACA – have said early and often that they will not implement state-run health insurance exchanges. Alaska, Florida, Louisiana, South Carolina and Texas are all examples. (However, in a surprising development, Gov. Rick Scott of Florida announced after the November elections that the state will reconsider its decision.)
These states have turned down and returned federal grant money for exchange planning. Some have passed laws and constitutional amendments banning state-run exchange. Oklahoma continues to fight the ACA in court. State Attorney General Scott Pruitt claims that penalties for business who don't offer healthcare insurance to employees should apply only in the case of state-run insurance exchanges. Since Oklahoma will have a federally run exchange, its employers would be exempt from penalties.
As of Nov. 19, 2012, 19 states (and Washington D.C.) had decided on state-run exchanges, one state had announced a state-federal partnership, and 17 states had opted for federally operated exchanges. Official decisions were ending in the rest of the states. See what your state has decided.
The Affordable Care Act (ACA) requires that all health insurance plans sold on state exchanges beginning Jan. 1, 2014 cover ten essential benefits:
However, the specifics of what will be included in each of the categories have been left to individual states. Each state will choose an existing health plan to use as a model:
In addition to addressing what will be covered, the ACA also broadly outlined the level of benefits – how health care costs will be split between health plans and consumers.
General percentage by level paid by consumer
(through deductibles, copays and coinsurance)
Bronze Level – 40%
Silver Level – 30%
Gold Level – 20%
Platinum Level – 10%
By Chuck Smith-Dewey
July 29, 2011
America has always been defined by progress. Yet the Affordable Care Act (ACA) has elements in many states trying to turn back time. Louisiana, with it’s barrel-bottom ranking of the 49th healthiest state to live in, adds to a growing list of states bucking reform as its governor refuses to set up a federally-mandated health insurance ...(continue reading)