State of the States: Health Insurance Exchanges

December 7, 2012

After many, many weeks of announcements by governors, letters from exchange stakeholders and countless pages of federal regulations, this was a slow week for exchange developments. This week, we got an update from CCIIO about their expected timeline for the federal exchange, Governor Chris Christie (R) announced that New Jersey would not be creating a state-based exchange at this time and the few remaining states that have not announced their exchange decision continued to ponder their options. Let’s start with the latest federal news.

Over the weekend, Gary Cohen, director for the Center for Consumer Information and Insurance Oversight addressed state insurance regulators gathered in DC for a conference. During the talk, Director Cohen stated that HHS will be ready to "open our doors" on October 1, 2013. He also said that while states will remain the primary regulator for their insurance market, the federal government would be prepared to enforce any exchange regulations not enforced by the states. He also announced that state regulators could expect to see additional Navigator regulations in January 2013.

After meeting with President Barack Obama along with a panel of other governors on a range of issues on Tuesday, Utah Governor Gary Herbert (R) said he was "encouraged" that the federal government would allow the Utah health insurance exchange, also known as Avenue H, to operate in its current form. On a conference call with reporters after the meeting, Governor Herbert said that according to President Obama, HHS would work to accommodate the “flexibility needs that we have so we can maintain our state exchange."

On Thursday, Governor Chris Christie (R) released a statement announcing that he had vetoed S-2135, legislation to create a state-based exchange, due to a range of unanswered questions surrounding the exchange issue. In his statement, Governor Christie said he cannot commit New Jersey “to a state-based exchange when the federal government cannot tell us what it will cost, how that cost compares to other options, and how much control they will give the states over this option that comes at the cost of our state’s taxpayers.” In his statement, Governor Christie also hinted that while last week’s guidance from HHS provided useful information on how the FFE would be financed, the regulations failed to address whether those fees would be shared with states. Even though Governor Christie rejected creating a state-based exchange at this time, he stated that he is open to readdressing exchanges in the future. In his letter to the Senate explaining his veto, Governor Christie wrote “My decision today should not be interpreted as foreclosing future consideration on this matter…Moving forward, I welcome further guidance from the federal government so that New Jersey can make a fully informed decision as to the best course of action for our residents and businesses.”

After the Michigan House Health Policy committee rejected legislation to create a state-based exchange last week, Governor Rick Snyder (R) seems prepared to move forward with a federal-state partnership. This week, Steve Hilfinger, director of the Michigan Department of Licensing and Regulatory Affairs, said that the partnership model offers "an important way to keep control over our health insurance market." However, Hilfinger reiterated a common concern over how federal-state partnerships will be funded in the future. "The federal government now has to spell out whether they are going to provide ongoing support for that. It could come from user fees. We don’t know."

In Idaho, Governor CL “Butch” Otter (R) is meeting today (Friday) with House and Senate legislative leaders from both sides of the aisle to get their input on what course Idaho should chart on the exchange issue. Governor Otter has been mulling Idaho’s exchange options ever since the Health Insurance Exchange Working Group recommended in late October that Idaho pursue a state-based exchange.  Governor Otter told reporters that while additional information from HHS has helped him learn more about his options, at the same time, it has made his choice more difficult.  “New rules, new guidelines. Just when we think we know what we need to do, the uncertainty of it all shatters what we think should happen.”

Despite the slow week, next Friday is another big day for exchange watchers. December 14 is the final day for states to declare their intent to create a state-based exchange and submit their Blueprint. Also, last week, HHS added the additional Exchange Establishment Grant deadline of December 28. After the December 28 deadline passes, the next deadline for Exchange Establishment Grants is February 15, 2013, which coincides with the last deadline for states to submit a Blueprint for a Federal-State Partnership exchange. 

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