WASHINGTON - The last deadline for developing a state health insurance exchange has now officially passed, but that doesn't mean the decision-making is over at the local level.
Friday, states had to announce officially whether they would create their own exchange, partner with the government, or abstain completely and allow the federal government to run an exchange in that state. At last count, 17 states and the District of Columbia decided to create their own exchange, seven states have asked to partner with the government, and 26 states have defaulted to federal exchanges.
Florida, New Jersey and Tennessee, all of which have Republican governors, announced Friday they would not create health insurance exchanges and let the federal government do it for them.
In his announcement Friday, New Jersey Gov. Chris Christie said he's committed to following the law and outlined several measures the state has taken to make health care more affordable. Florida's Rick Scott and Tennessee's Bill Haslam decided likewise.
The states that abstained from creating their own or partnering with the government for an exchange must decide whether they want to make decisions about rate control or who may participate in state plans, and the insurers need to decide where they will offer plans and whether they will offer them through the federal exchange program.
"The states will be saying, 'We've always done this and we want to continue,' " said Joel Ario, managing director at Manatt Health Solutions and former director of health insurance exchanges under President Obama. "These are the details to still work out."
The health insurance exchanges, or marketplaces, must be up by October so people can enroll in new insurance plans in time for Jan. 1, when the 2010 health care law requires the exchanges to open. That's when the individual mandate kicks in, requiring most Americans to purchase health insurance or face a fine, and it's also when the new insurance plans required by the law go into effect.
A health insurance exchange is a website that allows a person to compare benefits and costs of several plans. It also will inform people if they are eligible for subsidies to help pay for the insurance, or for the newly expanded Medicaid program. The hope is that people who have never before bought insurance will be able to do so easily.
In the past, Ario said, the states' insurance commissioners have monitored insurance rates and have decided who could operate in their states.
"That's not as much of a day-to-day partnership with the government," he said, explaining that the mostly Republican-led states that have chosen not to create exchanges could still participate in those decisions without upsetting their political base. Many governors chose not to create exchanges in defiance of the law, saying it's a product of Big Government and that it costs too much. Those in favor of the exchanges and the law say it will ultimately cut costs throughout the health care system.
Because of Friday's deadline, Ario said, insurers now "have a pretty clear time frame" for getting set up, but he said there would be a small push for participation in the overall market.
"In most cases, insurers are playing where they already have strong participation," he said. Those areas already have provider networks set up. "The larger the state, the more likely there will be local and national competition."
The smaller states have always had a harder time attracting competing insurers, he said.
Joel Michaels, who works with insurers at the law firm, McDermott, Will and Emery, said insurers will continue to stand back until the Department of Health and Human Services issues final regulations for what insurers must offer. He said he has been told those regulations are "imminent."
"There are a lot of questions about how all this is going to come together," he said.
In a sense, the federal government's effort to give the states a lot of room have made implementing the law more difficult, Michaels said. Each state has its own local rules and customer preferences. For example, consumers in California may push for alternative medical therapies, while states with more rural areas may be more interested in telemedicine programs. That will provide challenges for the federal exchange, he said.
On top of the federal regulations, the states may also determine what benefits they expect insurers to provide to participate in the exchanges.
"The national insurers may be holding back to see how those additional details are going to shake out," Michaels said. "I think the lines of communication will increase once these final rules are out."