State of the States: Health Insurance Exchanges

August 24, 2012

After weeks of suspense, the Department of Health and Human Services (HHS) announced $765 million in Level One and Level Two grant awards to eight states on Thursday. Also this week, there were numerous developments in the Midwest and we learned that a U.S. Territory is now examining whether to create a health insurance exchange. Let’s get started.

On Thursday morning, HHS announced that California, Hawaii, Iowa and New York were awarded additional Level One grants while, Connecticut, Maryland, Nevada and Vermont were awarded Level Two grants. The grant awards ranged from California’s sizeable $196 million award all the way down to Iowa’s $26.6 million award for additional IT work to coordinate the state's various databases and integrate the state’s Medicaid eligibility solution. The four Level Two grant recipients join Rhode Island and Washington as the few states that have received Level Two grant funding. Additional details can be found on HHS’s website. The next round of Exchange Establishment grant applications is due on November 15, 2012, one day before state Blueprints and declaration letters are due to HHS.

Also during the fanfare, Lt. Governor Anthony G. Brown (D-MD) held a press conference to announce not only the state’s Level Two grant, but also the new name for Maryland’s Health Benefit Exchange. Renamed the “Maryland Health Connection” and sporting a new logo, the Connection already has a functional website. As many as 150,000 individuals are expected to use the Connection during its first year.

Moving west, California’s statehouse was busy last week examining legislation (SB 703) to create a Basic Health Plan to cover people with incomes between 133 and 200 percent of the federal poverty level. However, in the end, the Assembly Appropriations Committee did not advance the bill. If passed, the Basic Health Plan would have covered an estimated 900,000 Californians. But the Basic Health Plan issue could reemerge in the future. On August 16, Governor Jerry Brown (D) sent a letter to legislative leaders informing them that he intends to call a special legislative session in either December or January 2013 to focus on health reform implementation.

Focusing on a territory we rarely get to discuss (or visit), Governor John P. de Jongh Jr. (D) of the Virgin Islands announced this week that he hired two consulting firms to advise him on whether the Virgin Islands should create a Health Insurance Exchange. To perform an IT gap analysis, a $400,000 contract was awarded to NewWave Telecom and Technologies, while Value Advisory Group was awarded an $199,000 contract to analyze the impact of an exchange on the insurance market.

Meanwhile in the Midwest, there were signs that exchange implementation may be slowing in multiple states.

Governor Rick Synder’s (R-MI) administration announced that Michigan was no longer on track to create a state-based exchange by HHS’s deadline and will now pursue a Federal-State Partnership. According to spokeswoman Sara Wurfel, “the governor continues to believe that Michiganders would be much better served with our own state-controlled exchange rather than the feds making those decisions for us.”

In late July, Governor Daniels (R-IN) asked all of the state’s gubernatorial candidates for their views on whether to create a health insurance exchange or participate in the Medicaid expansion. This week, Republican gubernatorial candidate Mike Pence was the first candidate to respond. In his letter, Pence stated that he was against creating a health insurance exchange because there was "too much uncertainty" surrounding the issue.

Minnesota’s health insurance exchange planning is continuing to move forward, but Governor Mark Dayton (D) said in a letter to state legislative leaders that he will wait until after the November elections before making a final decision on the state’s health insurance exchange. This is an interesting move for the Governor since it was only in July 2012 when he submitted a letter to HHS stating that it was “Minnesota’s intention to continue the planning and development of a Minnesota Health Insurance Exchange.” The Governor also wrote at the time that “We are excited by this opportunity to design our own Exchange…” Despite the Governor’s intention to wait before deciding the final fate of Minnesota’s Health Insurance Exchange, the state continues its planning efforts. Last week it submitted a Level One grant application for an additional $42.5 million in funding.

Finally, according to the minutes of a meeting between the West Virginia Office of the Insurance Commissioner and the state’s health care providers, the state’s HIX IT system RFP is ready to be released. However, the state is now deciding if it will pursue a state-based exchange or a federal-state partnership. If the state moves toward a state-based exchange, a Financial Sustainability Plan produced in July suggests the state is leaning toward leasing the state’s HIX IT system as opposed to purchasing

Looking ahead, State of the States will be taking a brief hiatus over the next two weeks in light of the Republican and Democratic National Conventions.  We’ll keep tracking exchange news in the meantime and will look forward to resuming on Friday, September 14.  Have fun in Tampa and Charlotte!

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