December 15, 2012
On December 6th, New Jersey Governor Chris Christie vetoed a bill that would have created a health insurance exchange for his state under President Barack Obama’s signature healthcare reform law. Leading up to the states’ December 14 deadline to declare whether they would run their own exchange, many have interpreted state decisions to operate their own exchanges – or not to – along political lines.
I talk about state exchanges with Dan Gorenstien in his Marketplace piece, “States must make health care decisions,” and with Alex Wayne in his Bloomberg.com article, “Insurers Face Jumbled Market With Health Exchange Rules.” But the decisions we are seeing now are much less political, than practical. Here’s why.
First, health insurance exchanges are the law of the land based on last summer’s Supreme Court decision on the constitutionality of the Patient Protection and Affordable Care Act (PPACA or ACA) and cemented by President Obama’s re-election. There will be no repeal of Obamacare. That political window has now closed.
Second, under ACA, a state can choose to have the federal government run its health insurance exchange either on an interim basis or indefinitely. So residents of New Jersey, Tennessee and other states that are leaving it to the Feds will have access to individual health plans on January 1, 2014 through a health insurance exchange. They will be covered.
Here’s why the move is practical. I know from running the nation’s largest private Medicare exchange for the last eight years that building an effective exchange does not happen overnight. It is time consuming and costly, with many moving parts.
There is the underlying technology and the crucial relationships with the health insurers that will offer plans in the exchange. There is the initial consumer outreach, education and support while consumers are evaluating and choosing plans and enrolling. There are the complex eligibility requirements that some individuals must meet to receive federal subsidies. Lastly, there is the reality that the newly insured will move between company, Medicaid and individual coverage at frequencies never before seen or managed.
Not knowing the details of what it will take to build and run an exchange or how much it will cost, Christie, Haslam and others feel it’s best to let the federal government run it for now. And they can revisit the decision in the future.
This makes practical sense. The states that will run their own exchanges from day one have been working on them for more than a year. For example, California was the first state to declare that it would run its own and appears to be further along than any other.
For New Jersey and others, at this time, it is the right move. That could change next year as more information about the success of the first state exchanges becomes known to the governor and state legislative leaders.
Governor Christie is right: This is a practical – not political – move.
- States must make health care decisions, Marketplace
- Insurers Face Jumbled Market With Health Exchange Rules, Bloomberg
- Map: Is Your State Building A Health Exchange?, Kaiser Health News and PBS Newshour
In today’s Bloomberg Businessweek’s Politics & Policy section, Devin Leonard writes on several Republican-headed states that are making some tough decisions on their states’ exchanges right now.
After health care reform was upheld by SCOTUS this summer, many states decided to wait until the election, leaving themselves precious little time to prepare for announcing whether they would run their states’ own exchanges if Obama won.
So as I point out at the end of Leonard’s story – Obamacare: For State Republicans, It’s Decision Time – give it a minute.
The afterglow of the elections will fade away along with the pre-election rhetoric on repeal and replace. Even though states that were on the health care reform offensive will be starting behind the curve – they’ll get there.
You have to ask, does the Governor Perry really want the Federal government running the Texas exchange? “Not for long,” is the most likely answer.
Look to states on the Federal exchange to start setting up bridge strategies to take their exchanges over. Many decisions will be based on their own state-specific circumstances.
States will also be getting a second cut at rebuilding their Medicaid IT infrastructure through its expansion. They’ll get to upgrade legacy systems developed in the Vietnam era, some of which are running on COBOL. There have already been some signposts that officials of states not initially signing on to the Medicaid expansion may be campaigning for it to relieve the pressure they’re now under, like in the Dallas–Fort Worth area.
Once we get past the optics of saying they’re against Obamacare, I believe that even Republican-led states will get there. There’s nothing like a new year to put a different spin on things.
In 2013, I expect that states currently holding out on running their own exchanges will take a fresh look and consider starting a legislative process to build, own and control their own.
- Obamacare: For State Republicans, It’s Decision Time, Bloomberg Businessweek
- Texas counties consider going it alone on Medicaid expansion, The Washington Post