States Lag on Health Exchanges

Once the law is fully implemented, health care exchanges will be the part of the Affordable Care Act we likely notice most. The exchanges were designed to turn health insurance into something approximating a real market—unlike the current system which creates a myriad of blocks that prevent the consumers from purchasing health insurance as they would any good, forcing families to either receive insurance through their employer, pay exorbitant costs for individual, or go without any coverage. The exchanges—along with subsidies for low and middle-income Americans—will ease that burden, allowing consumers to select a plan from a central hub without worrying about pre-existing conditions affecting their coverage.

Liberals shouldered a number of defeats in 2009 and early 2010 as the Affordable Care Act snaked through the grind of congressional dysfunction. The failure of a public option ate up most of the attention at the time, but a minor shift in how the exchanges would operate might have been just as important. The original bill passed by the House in 2009 arranged for one single national exchange. A robust national exchange would not increase competition among insurance companies, it would have provided consistency across the country. However a national exchange was discarded as part of the compromise with the more conservative Senate bill. States were tasked with writing the rules for their own individual exchanges, a concession to the more conservative states that might prefer a weaker health insurance market.

With 2014 fast approaching, many states are still dragging their feet at setting up the exchanges. If a state fails to have their own exchange system in place by the deadline, the power then shifts back to the federal government to arrange the market for the state. Politico reported Tuesday that barely over a dozen states are primed to operate their own exchanges come 2014.

Thirty-four states and Washington, D.C., received exchange planning grants totaling $856 million. Only 14 of them have passed legislation authorizing an exchange, and a couple more are moving ahead under executive orders from the governor. But even some of these states, further along in the planning process, have slowed down while awaiting the Supreme Court ruling on the health law or because the Department of Health and Human Services has been slow to spell out the detailed rules for setting exchange policy.

This partnership approach, which HHS first proposed last summer, is intended to be a transitional step for states that can’t meet the deadline to open their doors in 2014. But now it’s likely to be the default, not the fallback.

This will of course all be moot if the Supreme Court upends the law next month. But assuming the law remains in place, this outcome could be a positive turn of events. It seems likely that a Health and Human Services-directed exchange would offer more consumer protections and comprehensive coverage than a plan dictated by a conservative state legislatures. That is, however, a double-edged sword. While A HHS overseen by Kathleen Sebelius would build adequate exchanges in 2014, that might not be the case for whomever a President Romney would appoint to the position.

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