Six states get conditional approval for health insurance exchanges

Six states have received conditional approval to operate online health insurance exchanges, meeting regulatory criteria established under authority of the Patient Protection and Affordable Care Act (PPACA).

Colorado, Connecticut, Massachusetts, Maryland, Oregon and Washington received the go-ahead from the U.S. Department of Health and Human Services to begin enrolling members in October 2013. A total of 14 states have told HHS they plan to operate their own exchanges; the 36 other states have until Friday to decide whether they will create exchanges or default to a federal plan.

Governors in 28 states, including Pennsylvania, New Jersey and Virginia, have decided to have the federal government run their plans.

Many of the governors of those states are Republican; all of the governors of the six states that received conditional approval are Democrat.

Despite what more than half of U.S. governors have said about not running their own exchanges, HHS Secretary Kathleen Sebelius wrote in her blog post that she expects to make many announcements in the coming months about states moving forward with their exchanges.

“The majority of states will play an active role operating their exchanges,” Sebelius wrote in the blog post announcing conditional approval of the six states. Read her blog here: Sebelius blog

States have until Friday to announce whether they will run an exchange. The deadline was extended by one month to Dec. 14 to allow states to digest regulations attached to the exchanges, some of which have yet to be announced.

President Obama’s landmark health reform law requires all Americans to be purchase private health insurance or be covered under a government plan beginning in 2014. Those who do not could face fines or have their federal tax refunds withheld until coverage is obtained.

An overlooked portion of the law was made public this week when it was learned that employers will be required to pay an additional $63 per employee in federal fees to cover people with pre-existing conditions. The Obama administration asserts the fee will decrease over time.

About 30 million people are expected to be added to insurance roles when PPACA takes full effect, and about half will likely buy plans through exchanges with government subsidies, and about 11 million more will become eligible for Medicaid.

The Supreme Court ruled in June that states can opt out of the Medicaid expansion portion of PPACA, which was described as being crucial to the law’s successful implementation. Some states asked Sebelius – whose department is writing new regulations related to PPACA – if they could expand Medicaid less than what the Obama administration sought, while still taking advantage of a 90% reimbursement from the federal government.

The Administration said that states will not get full federal support unless they fully comply with the law, requiring Medicaid expansion.

“The Obama administration’s refusal to grant states more flexibility on Medicaid is as disheartening as it is short- sighted,” said Louisiana Gov. Bobby Jindal, chairman of the Republican Governors Association. “The current Medicaid system is broken, and it is an inefficient mechanism for expanding coverage.”

Pennsylvania Gov. Tom Corbett said his state will not participate with PPACA because it has not received sufficient support to ensure Pennsylvania could comply with the law.

“For two years my administration has been engaged in careful planning around the implementation of the Affordable Care Act, continually seeking guidance from the federal government,” Corbett said in a statement. “Throughout this time, we’ve asked HHS questions to help determine costs, impacts and flexibility in order to inform our decisions.”

Five days before the deadline for application and submission of blueprints for the exchanges, “we received little acknowledgement of those questions.”

Corbett took Sebelius to task.

“Even HHS Secretary Sebelius recently admitted on a call with governors that the regulations released a few weeks ago were not final and that more drafts are to be expected,” Corbett said.

“Healthcare reform is too important to be achieved through haphazard planning,” he added in announcing his decision to default to a federal exchange. “Pennsylvania taxpayers and businesses deserve…a strong plan that responsibly uses taxpayer dollars.”