American Medical News

GOVERNMENT

Despite newly relaxed federal deadlines, some largely GOP-led states have decided to reject the option of operating the coverage marketplaces themselves.

By Jennifer Lubell, amednews staff. Posted Nov. 26, 2012.

The federal government gave states more time to decide if they want to pursue their own health insurance exchanges under the Affordable Care Act, but the leaders of some states said they already knew which way they were heading.

On Nov. 16, when states originally were to inform the Dept. of Health and Human Services of their plans, Bruce Greenstein, secretary of the Louisiana Dept. of Health and Hospitals, made it clear in a letter to HHS that his state did not want to take on the risks of developing its own exchange. The ACA authorized exchanges as marketplaces through which consumers could shop for coverage, and it encouraged states to form their own. A federal exchange will operate in any state that does not launch one.

gWith incomplete regulations and unrealistic deadlines, states and the federal government will struggle to have a health insurance exchange ready for open enrollment on Oct. 1, 2013, that is not beset with major complications for the insurance market and the respective residents of the states,h Greenstein wrote to HHS Secretary Kathleen Sebelius.

HHS extended the deadline for interested states to submit declarations and blueprints on state-based exchanges to Dec. 14, responding to a request from the Republican Governors Assn. RGA spokesman Mike Schrimpf said his organization was pleased the Obama administration had gacknowledged that governors have not been provided enough informationh and had signaled a willingness to work with GOP governors on key issues. But the leaders of more than a dozen states, mostly Republicans, indicated that they would not pursue a state-based exchange anyway.

In a letter to HHS, Wisconsin Gov. Scott Walker said 90% of residents in his state already have insurance coverage without the help of an exchange. Choosing a state option would subject residents to ga federal mandate lacking long-term guaranteed funding,h he wrote.

The funding issue appeared to be a primary factor supporting the decisions to reject state-run marketplaces. Georgia Gov. Nathan Deal demonstrated gfiscal responsibilityh by blocking implementation of a state-based exchange, Rep. Phil Gingrey, MD, (R, Ga.), said in a statement.

Ohio Gov. John Kasich said his state will not launch an exchange but was not prepared to be completely hands-off, either. In a letter to HHS, Kasich said the state will default to a federally facilitated exchange, but that Ohio will seek to retain regulatory control over local health insurance plans operating in the exchange as well as the authority to determine Medicaid eligibility. His office also cited a cost rationale for rejecting the state-run option.

The ACA, however, provides substantial grant money to cover state exchange startup costs, and neither states nor the federal government is expected to bear the maintenance costs of exchanges, said Caroline Pearson, a director for consultant Avalere Health LLC. gOnce exchanges are up and running, both states and the federal government will be self-sustaining — in most cases relying on premium assessments on participating plans to support ongoing operating costs.h

These states also are overlooking the advantages state-based exchanges would provide, said Dan Mendelson, Avalerefs founder and CEO. Forgoing a state-based or even a partnership exchange with the federal government means a state will default entirely to federal control. In rejecting a state-based option, some officials said they would be too limited in what they could do, but a federal exchange actually may offer less flexibility, he said.

Running its own program would make it easier for a state to coordinate with Medicaid, Mendelson said. Many low-income individuals are ggoing to go back and forth between Medicaid and the exchange. And when a state is engaged in its exchange, it will be able to ensure continuity with that population.h

Tim Maglione, senior director of government relations for the Ohio State Medical Assn., pointed out another possible issue with Kasichfs stance. Any state-federal disputes on insurance oversight eventually might require a court intervention, he said.

State exchanges seeking a strategy

Sixteen states and the District of Columbia, largely led by Democrats, have expressed their intent to pursue their own exchanges, according to Avalere data at this articlefs deadline.

For those states, next steps arenft just about creating administrative structures for the marketplaces, said Alan Weil, executive director of the National Academy for State Health Policy.

States must be efficient in how they regulate the health insurance market, he said. Developing an exchange involves simplifying and integrating eligibility systems and expanding the capacity of physicians and other health care professionals. gWefre pushing a lot more people into coverage. We expect demand to go up,h he said.

States pursuing their own exchanges include Washington, which submitted its blueprint a month before the original November deadline, and Maryland, one of the first recipients of federal money to develop an exchange. In expanding health insurance access to a projected 730,000 residents using federal subsidies, Maryland has a goal of lowering uncompensated care costs in the state while expanding access to primary care physicians and preventive services, said Tequila Terry. Shefs director for plan and partner management with the Maryland Health Benefit Exchange.

But some Maryland physicians are wary about proposals that may dissuade physicians from participating in exchange plans or even practicing in the state. There have been discussions, for example, that health plans may want to pay physicians at Medicaid rates, said Gary Pushkin, MD. Hefs an orthopedic surgeon in Baltimore who sits on the board of trustees of MedChi, The Maryland State Medical Society. He also participated in the exchangefs plan management committee. Another discussion involves imposing a tax on physicians and others to help fund the exchange, he said.

Maryland already has problems attracting doctors because itfs an expensive place to live and pay rates are low, and these types of proposals could further scare them away, Dr. Pushkin said. The fact that the doctor tax is being considered ggives me one more reason to ask why I should continue practicing,h he said.

Still, the hope is that physicians will be able to work out these issues with other stakeholders, said Gene Ransom III, MedChifs CEO. gThe process has been very collaborative, bringing brokers, insurers and physicians to the table,h he said.

By 2014, gevery state is going to have an exchange,h Mendelson said. gRight now, what youfre hearing is a lot of grinding of the wheels in preparation for a significant policy change.h

Copyright 2012 American Medical Association. All rights reserved.