States Lean on Feds for Health Insurance Exchanges

The federal government will run more health insurance exchanges as they come online next year than states. On Friday, both Virginia and Florida rejected running their own exchanges, just hours before the midnight deadline for states to officially declare whether or not they would set up their own insurance exchange or get some amount of help from the federal government.

Florida's refusal isn't too shocking considering Republican Governor Rick Scott had been a vocal critic of the Patient Protection and Affordable Care Act.

Virginia's Governor, Bob McDonnell, rejected setting up a state-run exchange, and sent a letter to Department of Health and Human Services Secretary, Kathleen Sebelius on Friday. McDonnell indicated his decision was based, in part, on what he characterized as the federal government's lack of direction and information.

"Originally, I asked that we begin the planning process to potentially operate a state-based exchange for Virginia, primarily so we would be in control of this process," wrote McDonnell. "However, despite repeated requests for information, we have not had any clear direction or answers from Washington until recent days, and we cannot conclude, as we review those materials, that we would have the control and flexibility needed to efficiently and effectively run our own state exchange."

Governors from Tennessee, Pennsylvania, and New Jersey cited similar concerns. At issue is the short run-up to prepare for an influx of healthcare consumers who will be looking to buy health insurance in 2014. Health insurance exchanges are part of the PPACA, but since open enrollment for 2014 begins October 2013, states only have ten months to set up the exchanges.

So far 25 states have decided to leave not only setting up the exchange, but also running them to the federal government.  Eighteen states and the District of Columbia have said they will run their own insurance exchange, half have been granted conditional approval from the federal government: Colorado, Connecticut, Massachusetts, Maryland, Oregon, Washington, New York, Kentucky, and Washington D.C.

The third option states had was to partner with the government on running the exchange. Only two states, Delaware and Illinois, have officially declared their intent to do so, though five others have said publicly they prefer the partnership option: Iowa, Michigan, Arkansas, West Virginia, and North Carolina. States have until February 15, 2013 to decide whether it will partner or not.

HHS extended deadlines for states to decide on running their own health insurance exchanges by about 30 days. The initial deadline was November 16.  Now that HHS has its list of which states will run their own exchanges, Secretary Sebelius has until January 1 to grant conditional approval to them.