The Obamacare change that’s unpopular in blue states


State-run insurance marketplaces are worried about reviewing exemptions for Obamacare's individual mandate. (Andrew Harrer/Bloomberg)

Welcome to Health Reform Watch, Jason Millman's regular look at how the Affordable Care Act is changing the American health-care system — and being changed by it. You can reach Jason with questions, comments and suggestions here. Check back every Monday, Wednesday and Friday afternoon for the latest edition, or sign up here to receive it straight from your inbox. Read previous columns here.

State-run health insurance exchanges are squabbling with the Obama administration over who should be responsible for deciding who deserves a free pass from Obamacare’s unpopular individual mandate.

At least seven state exchanges have sharply criticized an administration proposal that would shift responsibility for determining eligibility for mandate exemptions onto the state-run marketplaces in the 2015 enrollment period, scheduled to open Nov. 15. The states warn they don’t have the technical ability or funding to handle requests from people seeking a pass from the Affordable Care Act’s requirement to obtain insurance coverage or pay a fine. Some states have urged the Department of Health and Human Services to dump the proposal, while others are asking to delay its implementation by at least a year.

HHS offered the 15 state-run exchanges, including the District of Columbia’s, the option to pass along residents’ exemption requests to the federal government. Every state but Connecticut decided to let HHS handle exemptions in 2014, but the federal government wants all state-run marketplaces to review exemptions in future enrollment periods.

HHS, which signaled the policy shift in a wide-ranging proposal in March, said that allowing the states to push exemption requests onto the federal government created information technology challenges and split customer service responsibilities between the states and HHS, “which could make it very difficult for consumers to navigate the process.” HHS also said it could be particularly challenging for the federal government to process exemptions for people who said they didn’t have access to affordable coverage options.

The New York state exchange, known as the State of Health, is among those protesting the policy. “Given the need for a [state exchanges] to develop new technology, systems and procedures, it is unrealistic that [state exchanges] will be prepared to assume this responsibility for applications submitted on or after November 15, 2014," the exchange wrote.

The state exchanges frequently commented that only a national entity has the capacity to determine who qualifies for an exemption. Also, they said, if the states were tasked with this responsibility, they’d likely have to rely on a manual or paper process, slowing down the timeline for handling the requests, which could create greater confusion about people’s responsibilities for complying with the health-care law.

“This proposal alters the scope of responsibility that state marketplaces are required to shoulder after the marketplaces have already built IT systems and allocated funding for systems development,” wrote D.C. Health Link, the District's Obamacare exchange.

Washington state’s exchange, known as the Healthplanfinder, points out that the state-run marketplaces have to be self-sustaining by next year after federal grants run out. The HHS proposal adds an unexpected cost for the states, which would much rather focus on enrollment and helping existing customers, the Healthplanfinder wrote.

“Processing and granting the exemptions would also pull scarce resources away from customer service activities that either enroll consumers or help retain their coverage by managing their accounts,” the exchange wrote.

The administration could still tweak the HHS policy proposal or scrap it altogether. A spokesman for the Centers for Medicare and Medicaid Services, which is overseeing the exchanges, declined to comment on the specific proposal.

“We are examining comments from stakeholders on the draft proposal at this time,” said spokesman Aaron Albright.

As my colleague Sandhya Somashekhar reported, there have been relatively few requests for an exemption from the mandate – 77,000 so far. The numbers could increase early next year when people file their 2014 taxes.

The Obama administration is expecting requests to ramp up. Last year, the administration projected about 24 million people will be eligible for an exemption in 2016, and it expects half of those to apply for one.

Top health policy reads from around the Web.

Health-care spending jumps under Obamacare, but not prices. “Total spending on medical care spiked in the first quarter of 2014 as people gained health insurance under Obamacare, government data released Wednesday show. The dramatic 9.9 percent growth in healthcare spending helped to boost the economy overall amid slow growth in other sectors. … This measurement is distinct from growth in healthcare prices, which remained low, at a rate of 0.5 percent.” Elise Viebeck in The Hill’s Healthwatch.

Burwell nomination not looking like much of a fight. “Initially, Republicans seemed poised to use the confirmation process to spur further attacks on Obamacare. But instead, more than a half-dozen GOP senators said in interviews that they are impressed with Burwell’s credentials. In the end, the only thing standing between Burwell and a new seat in President Barack Obama’s Cabinet might be two tough grillings in front of the cameras.” Jennifer Haberkorn and Burgess Everett in Politico.

Oregon once thought it could save HealthCare.gov. “The date was Oct. 19, 2013, and Oregon's health exchange website was 19 days late. Yet, state technology workers and their counterparts at Oracle were convinced they were on the right track, so much so that they discussed making their technology available to the federal government to rescue the fed's then-struggling healthcare.gov exchange site. … Six months later, the roles are reversed.” Jeff Manning in The Oregonian.

Jason Millman covers all things health policy, with a focus on Obamacare implementation. He previously covered health policy for Politico.
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