Many States Still Hedging On ACA
States have less than two weeks to notify the Department of Health and Human Services about their plans for state health exchanges. And most Midwestern states have decided to forego plans for their own exchanges in favor of defaulting to a federal plan.
The Affordable Care Act mandated that every state, by January 1, 2014, have a healthcare exchange. These Web-based exchanges will offer health benefits to individuals and small businesses now getting them through the private market.
The law says that states can either set up their own exchange, opt for one that is a partnership between the federal government and state (the state would control things like plan management and consumer assistance) or default to a federally run program where HHS controls all functions.
States have to give HHS a decision by December 14. According to the Kaiser Family Foundation, the following Midwestern states plan to default to the federal plan: North Dakota, South Dakota, Nebraska, Kansas, Missouri and Wisconsin. States planning partnerships are: Ohio, Michigan and Illinois. Minnesota is the only Midwestern state planning to run its exchange and the governor of Iowa remains undecided.
In Indiana, outgoing Gov. Mitch Daniels has deferred a decision to Governor-elect Mike Pence, who said in a letter that a state-based exchange will: “…cost taxpayers millions of dollars and it is not clear that Hoosiers would benefit from incurring the cost of implementing this new federal healthcare bureaucracy.”
Pence said the estimated cost of setting up an exchange for the state is $50 million per year and that there is no evidence that a state-based exchange will provide more control over healthcare or lower the cost of premiums. He wrote that he is “firmly convinced” that neither a state-based nor partnership exchange is right for the state.
The ire over the ACA is also present in other Midwestern states. Terry Branstad, the governor of Iowa, remains undecided about how to run his state’s exchange and has not held his tongue on the matter. He recently sent a letter to HHS Director Kathleen Sebelius with 50 questions he said need to be answered before states can decide what to do.
Tim Albrecht, spokesperson for Gov. Brandstad, called the implementation of the Affordable Care Act “a bureaucratic nightmare for the states.”
“It would be irresponsible for the state of Iowa to move forward with an exchange without having the answers we need from the federal government” he said.
The governor has created an exchange work group and Albrecht said he prefers a state-based exchange to a “one-size-fits-all exchange built by bureaucrats in Washington.” The governor, however, is undecided as to how to proceed, awaiting more detail from HHS.
It is no surprise that Republican-led states are unwilling to create their own exchanges, but the political divisiveness attached to the ACA has made it difficult for some governors who want to run state exchanges to do so.
Missouri, in an unusual position, has a Democratic governor, Jay Nixon, whom willingly opted for a federal exchange. He chose this option even before a ballot initiative was passed by residents in November that prohibits any state official from working on implementing an exchange without authorization from the state legislature or a popular vote.
“Desire and political will are probably the foremost reasons why states are defaulting to federal plans,” said Linda Blumberg, policy analyst for the Urban Institute. “The information is there for states to move forward, which is how many are.”
Blumberg said in areas where there are questions, states and HHS are working around them and being told by HHS to “do the best you can or they will work around it later.”
Blumberg added that human resources may also play a role in the equation. Some states are in very different situations than others. Some, like Maryland, have greater human resources and expertise to draw on than others.
“For some, it makes complete sense to have the feds come in because they just don’t have the capacity in or around the government to make it happen,” she said. “If you can’t do it right on your own right now, it is better to default.”
The third option is to hold a partnership exchange, which is what Illinois is planning. Mike Claffey, spokesperson for the governor of Illinois, said the state has filed a blueprint with HHS for their partnership. This plan spells out the administrative procedures the Department of Insurance will use to vet carriers that want to take part in the exchange.
Claffey said Illinois opted for a partnership because they were unable to pass legislation to create a full state-run exchange during the past legislative session.
“In the absence of having that authority passed through legislation, we thought the next best option is to get it up and running in partnership with the federal government,” he said. “A partnership gives the state a role and gives the Department of Insurance a role in the process in terms of selecting which carriers to be offered in the exchange.”
Blumberg and others, like Thomas McAuliffe, health policy analyst for the Missouri Foundation for Health, believe that all states will eventually run their own exchanges. McAuliffe estimates Missouri will by 2017. While politics may be keeping states from implementing their own exchange, he said it may be what motivates states to create their own plans down the road.
“Financial and political pressure applied to these legislature will move them toward state-based exchanges in the next three to five years,” he said. “Why? Because insurance companies want to be able to cajole Jefferson City and not Washington, D.C. They prefer to have a state rep in their own district determine fees than someone in Rhode Island.”
