The state health insurance exchanges are a central tenet of the health reform law’s goals to expand coverage and lower costs for health insurance. Individuals and small businesses will be able to purchase health insurance through the exchanges beginning in 2014. Exchanges will certify standardized health plans that provide different levels of coverage for “essential health benefits” based on the following actuarial values of coverage of benefits provided under the particular plan:
Why the Exchanges Are Important
Beginning in 2014, people who do not have access to qualifying and affordable coverage through their employer may qualify for federal subsidies for coverage purchased through an exchange. The subsidies, which are only available for coverage purchased through the state-operated exchange, include premium tax credits and cost-sharing reductions. However, to qualify, the person’s household income must be under four times the federal poverty level (generally, $92,200 for a family of four in 2012 dollars).
January 1, 2013, Deadline
Each state exchange must be ready to accept enrollees on October 1, 2013. Under the law, each state must demonstrate progress toward operational readiness by no later than January 1, 2013, although the Department of Health and Human Services (HHS) will grant conditional approvals for states that are moving forward. If a state fails to meet HHS’s deadline, then the federal government is tasked with operating the exchange within the state (federally facilitated exchange).
The feds are getting concerned that all 50 states’ exchanges might not be operational by the October 2013 deadline, potentially limiting the ability of consumers to access health insurance coverage. Although HHS has grant money available to the states to help plan and establish the exchanges, many states have yet to apply for funding. According to the Obama Administration, 28 states are “on their way” toward establishing an exchange.
Why the inaction at the state level? Some state legislatures are ideologically opposed to the health reform law, while others are waiting for the Supreme Court’s decision on whether the law is constitutional. Consequently, many states will fail to meet next year’s January 1 readiness deadline. Although HHS has issued final regulations on the establishment and operation of the exchanges, it has issued no guidance to date on how a federally facilitated exchange would operate.
The Feds Are Scrambling
In early January, the White House reiterated that HHS “has the capacity to ensure all Americans will be able to purchase insurance in an exchange on January 1, 2014.” HHS continues to encourage states to move forward with their exchanges. Late last year, HHS began touting a federal-state partnership to operate an exchange. Under this model, the state performs some exchange functions, but leaves other functions to the federal government.
If the health reform law withstands judicial scrutiny, many states will be scrambling to have their exchanges up and running by October 1, 2013.
State Exchange Status at This Time
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