GAO: The insurance exchanges may not be ready in October

State-run exchanges have missed deadlines for 44% of key activities

Topics: Medicaid, Reimbursement, Finance, Medicare, Payer and Regulatory Policy, Market Trends, Strategy, Health Policy

June 19, 2013

Federal and state health officials appear to be delayed in setting up new health insurance exchanges for small businesses and consumers, and it "cannot yet be determined" whether the exchanges will be ready to open in October, according to two new Government Accountability Office (GAO) reports.

  • Your Guide to Health Insurance Exchanges: Advisory Board experts outline what you need to know about the marketplaces before their scheduled Oct. 1 launch date.

The Affordable Care Act (ACA) established separate exchanges for small businesses and individual consumers through which uninsured U.S. residents could purchase health coverage. The Congressional Budget Office has estimated that about two million U.S. residents will gain coverage through the small business exchanges and seven million U.S. residents will enroll in the individual insurance exchanges in 2014.

Details from the reports

In the two reports, GAO acknowledged that state and federal officials have made significant progress in developing the regulatory framework and guidance to implement the exchanges.

However, GAO said that state and federal officials still have major work to complete before open enrollment begins Oct. 1, noting that it is unclear if they will meet the deadline. 

The reports identified several issues facing state and federal officials, including:

  • Officials creating the small business exchanges still must review plans that will be sold and train and certify consumer aides who will help companies and individuals enroll in plans); and 
  • A federal "data hub" designed to help individuals determine their eligibility and enroll in plans offered through the exchanges has only undergone initial testing.

According to the reports, the 17 states running their own exchanges have missed deadlines on an average of 44% of key activities that were scheduled to be completed by the end of March. "While interim deadlines missed thus far may not impact the establishment of exchanges, any additional missed deadlines closer to the start of enrollment could do so," the reports warned.

The reports also provided the first look at what the federal government has spent on the federal exchanges and the data hub. Specifically, the reports said that the Obama administration had spent nearly $394 million on exchange efforts as of March, mostly through payments to 55 different contractors, including:

  • $84 million to CGI Federal, which is building the federal exchange computer infrastructure;
  • $55 million to Quality Software Services, which is building the data hub; and
  • $38 million to Booz Allen Hamilton to provide technical assistance for enrollment and eligibility.

The reports estimated that the Obama administration would need an additional $2 billion in the next fiscal year to create and operate the federal exchanges. However, it is unclear if Congress will approve the extra $1.5 billion needed to reach the total.

The report noted that some states with Republican-controlled legislatures or governors have made efforts to accommodate the law, noting that 15 states with federally run exchanges are expected to carry out at least some functions of the exchanges. 

CMS director says exchanges will be ready on time

In related news, CMS Deputy Administrator Cindy Mann last week said that she is confident that states will be ready to enroll millions of newly insured U.S. residents in October.

Speaking at the Washington ACO Summit, Mann acknowledged that there will be a few glitches that need to be addressed, such as improving the Medicaid enrollment process. Mann said states will likely not be ready to implement "plan A" during the first year and instead will rely on "plan B" (Radnofsky/Needleman, Wall Street Journal, 6/19; Alonso-Zaldivar, AP/Sacramento Bee, 6/18; Daly, Modern Healthcare , 6/18 [subscription required]). 

Want to know more about the ACA's coverage expansion?

In 2014, the ACA's Medicaid expansion and health insurance exchanges will go live, expanding insurance to millions of Americans.  

The insurance exchanges: Register for our July webconferences to learn everything you need to know about the insurance marketplaces before they begin enrolling patients on Oct. 1. For an immediate look, check out our new white paper.

The Medicaid expansion: Listen to this on-demand webconference to learn how to manage your hospital's new Medicaid population. For a quick glance, check out the Daily Briefing's primer.

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