The Obamacare exchanges are important. Who runs them isn’t.

December 14, 2012

After two delays, today is a big health-policy day. Today is the day that states announce whether they will run their own health-insurance exchanges, or leave the task to the federal government. Exciting, right?

Right.

Exchanges are a huge component of the health-care law: They're the online marketplaces where Americans can compare and purchase insurance plans. Come 2014, they will be the only place where individuals can spend the $23 billion in insurance subsidies that year.

But even for the wonkiest of health-care wonks, this is one of the harder decisions to get excited about. For one thing, we're not expecting many surprises. Nearly all of the states have already made their intentions clear, as you can see on this map, which comes from consulting firm Avalere Health.

"At this point, my sense is that things are fairly baked in for the deadline," says Caroline Pearson, who directs a team of 12 trackers following exchange developments.

The dark blue states will build their health exchanges on their own. That means they'll stand up complex IT infrastructures that can determine who is eligible for which insurance program. These states will decide who gets to sell on the insurance exchange, how they'll pay for the operation and how they'll make sure that people actually know about the new program. 

The light blue states won't be doing any of that: Those states will leave all those tasks above to the federal government. That creates a big lift for Health and Human Services; Avalere estimates that about two-thirds of the Americans who will gain insurance through the exchanges will do so on a market run by the federal government.

The yellow and green states are somewhere in the middle. They'll probably handle things that need to be done on the ground, things like outreach and letting people know about the new options. The federal government will handle the more complex stuff, things like income determination and eligibility.

There's a huge difference for states in workload, whether they decide to take on the entire task or leave it to the federal government. But for consumers, most health policy experts think it won't have a huge impact. Everyone, come October 2013, will have a Web site where they can use premium subsidies to purchase an insurance policy. 

This isn't like the Medicaid expansion. When states decide not to participate in that program, they're deciding whether or not those earning less than the poverty line will gain access to insurance. That's not the case with the insurance exchanges: If states don't move forward, the federal government comes in and takes over the task.

"From the consumer perspective, hopefully there won't be a huge difference," Pearson says. "Either way, you're going to go online and compare offerings."

Still, some see space for a federal exchange to work less smoothly than ones in the hands of states. That includes Joel Ario, who spent two years at Health and Human Services, overseeing the health exchanges for the federal government. If there's anyone who knows health exchanges, its him.

Ario points to one provision in federal regulations, which initially indicated that the federal government would handle determining who was eligible for what: If they earned below 133 percent of the poverty line, for example, and qualified for Medicaid.

The states balked: They had always been responsible for determining Medicaid eligibility and did not want to cede that power to the federal government. So the final, federal rules were revised: Both states and the federal government will get to run eligibility determinations -- for the exact same consumers they're serving.

"What you're going to have is these states where you'll have the federal government saying this case looks like 100 percent of the poverty line, but then the state can choose to do an assessment," says Ario, who now works at the law firm Manatt, Phelps & Phillips. 

That could gum up the process of getting people enrolled, if the process has to run through the federal government and then cycle again through the state officials. "If you involve two layers of government in decision making, that's most likely going to make it less smooth than having just one," Ario says.

Ario sees that as a minor obstacle: The benefit determination will get made; it just might take a little bit longer. But it will get done, and there's not much states can do at this point to stand in the way.

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Ezra Klein · December 14, 2012