Administration may give states second chance to avoid fully federally run insurance exchange

By Associated Press, August 24, 2011

HELENA, Mont. — The Obama administration said Tuesday that states that have not adopted their own insurance exchanges may get a second chance to avoid getting one run solely by the federal government.

Only 11 states have fully embraced the idea of taking federal money to set up their own state-run insurance exchange, a U.S. Department of Health and Human Services official said Tuesday. The exchange, a key part of Obama’s health care overhaul, is designed to help uninsured people buy coverage from a choice of plans with federal tax credits.

But states that have been slow to accept the idea, or outright rejected it in resistance to the law, will have another chance.

U.S. Department of Health and Human Services officials told Montana legislators Tuesday that the agency is working on a new partnership model to let state agencies help run the exchange — perhaps without the need for legislative authorization.

Marguerite Salazar, a regional director of the Department of Health and Human Services, said the proposal for the partnership is new within the past two months. State agencies are being invited to Washington D.C. next month to discuss it.

“I think it is going to be the option for states that are nervous about a full-fledged exchange,” she said in an interview.

Montana is one of many states that have so far refused to pass a law authorizing a state-level insurance exchange, paid for by the federal government. Like some other states, Montana’s legislature does not likely meet again soon enough to authorize an exchange prior to the January 2014 implementation.

And under the health care law, the federal government will impose its version of the exchange on states that don’t set up their own.

Republican-led states have been particularly resistant to the idea as many of those legislatures have worked to undermine the federal law.

Texas for instance, led by Gov. Rick Perry who is now a leading GOP contender to challenge Obama, also blocked moves to lay the groundwork for expanded coverage under the federal law that many Republicans hope will be thrown out by the courts.

Perry, who has made total repeal of “Obamacare” a top campaign promise, has however signaled he may use executive authority in Texas to carry out the exchange in order to avoid one run by the federal bureaucracy.

In Montana, Republican legislators who currently hold commanding majorities may be convinced to eventually change their mind about the exchange in order to avoid a federally mandated version, one GOP lawmaker said.

“I think there may be enough mainstream Republicans that realize the more input Montana has on our own exchange will be a great benefit to the citizens of the state,” said Republican state Rep. Tom Berry, who lives in the conservative eastern Montana town of Roundup.

Berry chairs an interim committee of Montana lawmakers who were discussing the state’s options Tuesday with the federal officials in the wake of the full legislature’s rejection of the exchange earlier this year.

The Montana lawmakers were told Health and Human Services may also let them later take over a federally run exchange after it is designed over the next two years.

In the interim, Berry said he likes the sound of the new, undefined proposal from the federal government for a partnership that lets the state craft an exchange run by the feds.

In Montana, Democrats run the executive branches overseeing health care and insurance. They may be more likely to accept the federal offer for a partnership.

Republicans on the panel quizzed the Health and Human Services officials over which part of the state government would be allowed to obligate the state into the partnership.

“That is undecided. I think this is an area where we may want to allow for a certain amount of state authority,” said Amanda Cowley, acting director in the agency’s state exchange division. “It will be set by the secretary of HHS in guidance or regulation.”