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Tag: state exchanges
Q&A: Could States With Federal Exchanges Easily Launch Their Own?

Q&A: Could States With Federal Exchanges Easily Launch Their Own?

By Christine Vestal, Stateline.org (TNS)

WASHINGTON — The Obama administration says it does not have a contingency plan if the U.S. Supreme Court rules against federal tax subsidies in King v. Burwell. But lawmakers in at least nine states are proposing backstop measures that legal experts say could work.

At issue is whether residents of the 34 states where the federal government runs the health insurance exchange under the Affordable Care Act can receive premium tax subsidies. Affordable Care Act opponents argue that a strict interpretation of the language in the statute indicates people can only receive federal subsidies if they purchase policies on an “exchange established by the state.”

If the high court sides with the plaintiffs, what’s to stop states from quickly establishing a state exchange? Florida, Indiana, Maine, Missouri, New Hampshire, New Jersey, Ohio, Pennsylvania and Texas have bills that would jumpstart the process.

Q: How easy would it be for a state to switch its exchange from federal to state?

A: It wouldn’t be easy. The first step would be enactment of a law authorizing a state agency, nonprofit or public-private entity to run the exchange. Next, a state would have to build or acquire a website to enroll residents, take over contracts with insurance carriers, develop a consumer assistance program and create a bureaucracy to operate the exchange.

Q: Could the change be accomplished quickly?

A: Judging by the time it took the 16 states that have already established their own exchanges, the answer is “no.” But with strong political support, a state could expedite the process in an attempt to prevent its residents from losing federal subsidies and potentially becoming uninsured. Still, it would be difficult for a state to complete the transition before the high court’s decision — which is expected in late June — would likely take effect. Some argue the court should provide a grace period lasting through 2016 to allow states that want to create their own exchanges to do so.

Q: What’s at stake?

A: An estimated 8.2 million people would likely lose insurance coverage if the high court decides in favor of the plaintiffs. Without premium tax subsidies, the monthly payments consumers would have to shell out for policies sold on the exchange would rise an average of 255 percent in federal exchange states, making them unaffordable for the vast majority of people enrolled. In addition, premiums for policies sold off the exchange would spike an estimated 47 percent because the departure of so many relatively young and healthy exchange subscribers would increase the risk of the state’s overall insurance pool, according to a new study by the RAND Corp.

The 34 states with federal or partnership exchanges would lose $29 billion in federal subsidies in 2016, or $340 billion over ten years. In the first year, Florida and Texas, two of the states with bills that would authorize a state exchange, would lose $3.9 billion and $4.4 billion, respectively, according to an analysis by the Urban Institute.

Q: Can states take over their state-specific sections of HealthCare.gov?

A: Yes. Three states — Nevada, New Mexico and Oregon — already have done so, and all three are considered state exchanges by the administration and the plaintiffs in the case. Idaho temporarily used the federal portal until it completed construction of its own website last year. If the high court rules against federal exchange subsidies, the administration is expected to make it as easy as possible for other states to do the same thing.

Q: How would a website transfer work?

A: In Oregon, where the exchange website built by the state failed to perform, the exchange authority, Cover Oregon, got approval to use the federal website — HealthCare.gov — to enroll residents in exchange policies. An updated document known as an exchange blueprint served as Oregon’s contract with the federal government to take over the HealthCare.gov website, according to a spokesperson for Cover Oregon.

Similarly, Nevada abandoned its troubled website and co-opted the federal platform last year. New Mexico, which completed all the preliminary requirements for establishing its own exchange but ran out of time to build a website, is also using the federal website.

In all cases, the website and all of its transactions remained under federal control. State exchange authorities simply contracted with the federal government to provide enrollment services.

Separate health insurance websites and call centers were maintained by states to provide consumer information and assistance. All other functions — including oversight of insurance policies, annual audits, hiring and training of so-called “navigators” to assist consumers, and compliance with U.S. Department of Health and Human Services reporting requirements — were also performed by the state.

Q: How much would it cost states to take over their portion of HealthCare.gov?

A: It’s not known whether the federal government will charge states for use of HealthCare.gov. So far, Idaho, Nevada, New Mexico and Oregon have not been assessed a fee. But in the future, the federal government could charge a fee for website updates and improvements or simply lease the website to state-run exchanges.

Currently, the cost of maintaining and updating HealthCare.gov is funded in part through fees assessed on the insurance carriers that sell their policies on the website. In the three states using HealthCare.gov, and in all other state-based exchange states, those fees are assessed and paid to the state.

The U.S. Department of Health and Human Services granted states nearly $5 billion to build their own exchanges, but the deadline for receiving that money ran out last year. Federal grants are still available for consumer outreach.

Q: How likely is it that states will make the change?

A: Most states are not expected to make the change unless the court declares federal exchange subsidies illegal. If that happens, at least two governors have declared they will take immediate action to protect their residents from losing subsidies. Republican Governor John Kasich of Ohio and Democratic Governor Tom Wolf of Pennsylvania have said they are committed to such a contingency plan.

Photo: SEIU International via Flickr

Leaders Of State Exchanges Say They Won’t Need Bailouts

Leaders Of State Exchanges Say They Won’t Need Bailouts

By Maeve Reston, Los Angeles Times

Pressed by House Republicans, directors of troubled state insurance exchanges said Thursday that they could fix continuing Affordable Care Act glitches with grant money they have already received and would not ask for future federal bailouts.

Members of the House Oversight & Government Reform committee sought to turn their attention to the technical glitches after a week of celebration for the White House, which surpassed its goal of signing up more than 7 million under the new health care law.

Witnesses called to Capitol Hill included the current and interim heads of the exchanges in Hawaii, Maryland, Massachusetts, Minnesota and Oregon — which have all had varying degrees of problems.

(As a counterpoint, Peter Lee, the executive director of Covered California, touted the successes of California’s exchange, which has enrolled some 1.2 million people — more than any other state in the country.)

Opening the hearing, U.S. Rep. James Lankford of Oklahoma said he was troubled that thousands of applications in those states were processed by hand because of dysfunctional systems and that many consumers were forced to use “error-ridden” websites. He and other members demanded an accounting in the coming weeks of how much grant money was used to manually sign up consumers who were stymied by faulty technology.

“How is it possible that after three and a half years, and spending hundreds of millions of taxpayer funds, so many states were not able to construct working websites?” Lankford asked the panel. “How many more taxpayer dollars may be requested to bail out troubled state exchanges next year?”

In part because of the ample grant awards that were parceled out to the 14 states that created their own exchanges, only Hawaii signaled an urgent need for financial assistance next year. Hawaii has signed up about 7,596 people in private plans after designating about $100 million in federal grant funds. Though they still have about $100 million in remaining federal grant money, they cannot use that money for operating costs in 2015.

Because most Hawaii employers already had to provide coverage under a state law that has been in place for 40 years, that state’s consumers have shown little interest in buying plans through the exchange, which has deprived the agency of fees that it was counting on. Legislators in Hawaii are considering the creation of fee on every health plan sold in the state that would pay for the up to $15 million that the exchange would need to operate next year, and director Tom Matsuda said the nonprofit exchange is looking at ways to further cut its expenses.

Republican lawmakers also focused considerable attention Thursday on Maryland, which received $180 million in federal grant funds but ultimately dismissed its primary contractor. The state now plans to salvage its system by switching to Connecticut’s technology platform at a cost of between $40 to $50 million. Joshua Sharfstein, who is Maryland’s health secretary and the chair of the Maryland Health Benefit Exchange board, said the state planned to recoup costs through litigation and told lawmakers they would try to return some of that money to the federal government.

But Republican lawmakers drilled Sharfstein about the state’s missteps and challenged his statement that Maryland would exceed its goals for enrolling Marylanders in private plans. In February, the independent Hilltop Institute at the University of Maryland-Baltimore County revised its projections for Maryland signups. Originally it told the state to expect 150,000 people to sign up for private insurance by March 31; but it later alerted officials that figure actually covered projections for the first two open enrollment periods, and should have been closer to 70,000.

Sharfstein said the state has enrolled at least 60,000 so far and that he expected that number would go up.

“So you’re into this and you’re not coming close to the 150,000 — and shazam, you get a revision,” U.S. Rep. Jim Jordan of Ohio charged during a contentious exchange during the hearing.

“Well, they had made an error in the report,” Sharfstein replied.

“How convenient,” Jordan snapped back.

“I testified that the IT didn’t work. I don’t disagree that we had a major IT problem,” Sharfstein told Jordan. “But it was overcoming that problem that allowed us to hit our enrollment goal.”

Several Democratic lawmakers said it was the technology vendors who warranted greater scrutiny in the coming months — positing that they misrepresented their ability to handle such complex projects.

Sharfstein said a major misjudgment for his state was relying on “off-the-shelf” products like the software they used to determine consumers’ eligibility for tax subsidies.

“We thought that it would be less risky to rely on existing products,” Sharfstein said. The software was portrayed as being ready “out-of-the-box,” but he said it “did not work as advertised, or even come close to it. It was defective and deficient on the launch, and created a whole range of problems that we had not anticipated.”

AFP Photo/Joe Raedle