Decision day: Which states are going with insurance exchanges—and does it matter?

As of press time, only Florida had not announced intentions

Graphics updated on Dec. 17 at 1:00 p.m.

Dan Diamond, Managing Editor

Ahead of Friday's deadline, every state but Florida has indicated whether it will run its own health insurance exchange, partner with the federal government, or allow the federal government to manage the exchange's operations.

Under the Affordable Care Act, the deadline to announce exchange intentions was originally slated for November, but the Obama administration allowed states an additional month to submit the detailed applications—or blueprints—required by federal officials. Meanwhile, states that intend to partner with the government will have until Feb. 15 to submit their declaration letter and blueprint.

A number of legislators and state lawmakers this week petitioned the White House for additional time, or asked federal officials to push back key rule-making.

But Gary Cohen, who heads the CMS Center for Consumer Information and Insurance Oversight, this week denied Republican senators' request to extend the comment period and delay the finalization of rules governing the health insurance exchanges.

"There's not a lot of time between now and October, and people are saying that we need to get these rules" finalized, Cohen said.

As of 12:30 p.m. ET on December 14, here's where the states stand, according to the Advisory Board's news teams:

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There are some slight differences between our tracker and, say, Kaiser Family Foundation's exchange monitor. (For example, we listed Iowa as a partnership exchange, based on this letter.)

But however you do the math, the result is clear: the federal government will be involved in at least half of the new insurance exchanges come next October.

Why states are sitting out (or opting in)

As Phil Galewitz writes at Kaiser Health News, the "option to have the federal government run the state markets was seen as a backstop. Administration officials have repeatedly said they hoped most states would run the markets themselves because they know their insurance markets best."

But the federal government's outsized role comes because many conservative governors—who are strong supporters of states' rights—said no to running state-based insurance exchanges.

On the surface, this is "an odd turn of events," Aaron Carroll observes at the JAMA Forum. Carroll, a researcher and physician at the Indiana University School of Medicine, notes that some states are sitting out because of protest against the ACA, while others are concerned that the exchanges represent an unfunded mandate.

There's more than politics at play, however. Speaking with the Briefing, Carroll notes that states are being rational in letting the government carry the burden of getting the exchanges off the ground, with the option to take over operations later on.

So why would governors of any state—especially liberal-leaning officials that generally trust the federal government's competence—accept the risk of launching their own exchanges?

In part, it's because "some of [these states] are going even further than the requirements that the ACA requires to get plans on the exchange," Carroll told the Briefing.  

"If you want to do more than the minimum, or have extra requirements that you would like plans to meet, then it pays to run things locally. Liberal states are more likely to want more than the minimum."

Does it matter?

In some corners and commentary, the flurry of go vs. no-go state decisions on insurance exchanges have been portrayed as miniature referendums on Obamacare.

However, Sarah Kliff argues at the Washington Post's "Wonkblog" that it may not matter whether states or the federal government run the exchanges.

"Everyone, come October 2013, will have a Web site where they can use premium subsidies to purchase an insurance policy," Kliff writes. 

"This isn’t like the Medicaid expansion. When states decide not to participate in that program, they’re deciding whether or not those earning less than the poverty line will gain access to insurance. That’s not the case with the insurance exchanges: If states don’t move forward, the federal government comes in and takes over the task."

It's a trenchant point. The Medicaid expansion stands to affect millions of Americans, with major implications for thousands of providers. The differences between a state-run and a federal exchange may be much more subtle.

But there will be differences. And Greg Anrig of the Century Foundation thinks it does matter—a lot—whether states or the federal government end up administering the exchanges.

As Anrig told the Briefing on Friday, the new structures will need:

  • To develop a user-friendly interface to help millions of Americans shop for coverage, in what may be their first real exposure to the ACA;
  • To make regulatory decisions about which health insurance plans to include in each state's exchange; and
  • To minimize adverse selection.

"All of those responsibilities were expected to be daunting for the exchanges under the best of the circumstances," Anrig recently wrote in Washington Monthly. But "the main upshot of so many states demurring or dithering over whether to create exchanges has left [HHS] with an unexpectedly colossal job for which it is ill-prepared and inadequately financed."

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