It’s crunch time for Obamacare’s broken exchanges

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.

The states that tried and failed to run their own Obamacare health insurance marketplaces aren't quite ready to call it quits.

With the health-care law's next open enrollment period just more than six months away, Nevada on Tuesday joined the ranks of Maryland, Oregon and Massachusetts as states that have ditched their faulty enrollment Web sites. Of the 14 states — plus the District — that chose to run their own Obamacare exchanges in 2014, these four have either decided to join HealthCare.gov or do enrollment through another system in 2015.

The broken exchanges present two major issues. There's the question of what happens to the hundreds of millions of dollars that were sunk into these failed exchange systems. Federal prosecutors on Tuesday opened up an investigation into Oregon's failed exchange, and the nominee to lead the Department of Health and Human Services told a congressional panel last week that the federal government will "use the full extent of the law" to recapture misspent funds. That storyline has the potential to get pretty ugly.

Secondly, supporters of the coverage expansion ultimately want to provide the easiest enrollment experience possible in 2015. It turns out that HealthCare.gov — despite its early problems and those that are still ongoing — is the better option for these problem states. And in many cases, states using the federal Web site were just as effective in signing up the eligible population as those states running their own exchanges in Obamacare's first enrollment period.

With the exception of Nevada, all the states that chose to run their own exchanges this year have Democratic governors. They built their own exchanges because they embraced the Affordable Care Act and they wanted to put their own stamp on how the exchanges are run.

So while Nevada residents will use HealthCare.gov to enroll in 2015, the board overseeing Nevada's exchange still gets to control many of the exchange functions. Nevada will still review insurance rates, decide what health plans can participate, oversee Medicaid eligibility and enrollment, and run the navigator program handling consumer outreach.

Oregon's exchange, which will join HealthCare.gov for 2015, will still oversee participating health insurers and handle consumer outreach and relations. Massachusetts, meanwhile, is still trying to cling to full control of its state insurance marketplace. The state is building a new enrollment system as it simultaneously prepares for a switch to HealthCare.gov if that's not ready in time for open enrollment starting Nov. 15.

Notably, none of those exchanges are following the path of Maryland, which was the first state to give up on its enrollment Web site. Maryland is planning to link with Connecticut's successful enrollment system in 2015, but federal health officials have appeared skeptical about the tight timeline. Massachusetts, Nevada and Oregon had also looked at the Connecticut exchange, but they're finding it's one of the more expensive and technically challenging options.

Nevada's exchange, which in 2012 had signed a $72 million deal with Xerox to build an enrollment system, found it would need another $57 million from the federal government to join up with Connecticut's exchange system. A member of Nevada's exchange board on Tuesday said Centers for Medicare and Medicaid Services Administrator Marilyn Tavenner in a recent meeting expressed doubt that the exchange had enough time to switch to Connecticut's system.

"I think the message from Ms. Tavenner was we have less time than we have money," the board member said moments before Nevada voted to dump Xerox and join HealthCare.gov.

And ultimately, Nevada and other states that failed may still try to bring their exchanges back under full state control after the 2015 enrollment period. So, they're not giving up just yet.

Top health policy reads from around the Web:

Insurers escalate fight with drugmakers. "The leading U.S. health insurance trade group on Tuesday hit out at the extremely high cost of new specialty medicines, accusing drugmakers of taking advantage of the insurance system by pricing products at unsustainable levels. The latest salvo in the war on escalating U.S. healthcare costs came from AHIP - America's Health Insurance Plans - and targeted Sovaldi, the new $84,000 hepatitis C treatment from Gilead Sciences Inc. ... The new drug has demonstrated an ability to cure well over 90 percent of patients in just 12 weeks or less with few side effects." Bill Berkrot and Caroline Humor in Reuters.

There's still some bipartisanship in health care. "As a Republican senator, Trent Lott was among those who successfully dug in against the Clinton-era health overhaul. Tom Daschle, then the Senate Democratic leader, fought Republicans on their prescription drug plan. John B. Breaux, a centrist Democrat who led a blue-ribbon Medicare commission, often found himself at odds with both parties. Now these three retired Senate powers are combining to push an expansion of tele-medicine as a way to improve health care access and cut costs. They say the idea of using the nation’s growing digital capacity to provide more health care has significant bipartisan support and could be an solution to the partisan schism over the Affordable Care Act." Carl Hulse in the New York Times.

West Virginia's exchange gets much-needed competition. "A Kentucky-based nonprofit insurance cooperative will join West Virginia’s federal health insurance exchange in time for the 2015 Affordable Care Act open-enrollment period, state Insurance Commissioner Mike Riley said. ... The cooperative plans to have products ready for the next open-enrollment period in 2015 and will join Highmark West Virginia, the only insurer to participate in the first ACA exchange in the state." Lydia Nuzum in the Charleston Gazette.

Jason Millman covers all things health policy, with a focus on Obamacare implementation. He previously covered health policy for Politico.
SECTION: {section=business, subsection=null}!!!
INITIAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=m6yzjj840m, display_more=true, moderationrequired=false, includefeaturenotification=true, canvas_allcomments_id=washpost.com/km4ey0dajm, comments_period=14, defaultsort=reverseChronological, includevoteofftopic=false, allow_videos=false, includesorts=true, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, childrenitemsperpage=3, includeheader=true, includeverifiedcommenters=true, defaulttab=all, includerecommend=true, includereport=true, maxitemstop=2, source=washpost.com, allow_photos=false, maxitems=7, display_ugc_photos=false, includepause=true, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!!

UGC FROM ARTICLE: !!!

FINAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=m6yzjj840m, display_more=true, moderationrequired=false, includefeaturenotification=true, canvas_allcomments_id=washpost.com/km4ey0dajm, comments_period=14, defaultsort=reverseChronological, includevoteofftopic=false, allow_videos=false, includesorts=true, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, childrenitemsperpage=3, includeheader=true, includeverifiedcommenters=true, defaulttab=all, includerecommend=true, includereport=true, maxitemstop=2, source=washpost.com, allow_photos=false, maxitems=7, display_ugc_photos=false, includepause=true, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!
Comments
SECTION: {section=business, subsection=null}!!!
INITIAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=m6yzjj840m, display_more=true, moderationrequired=false, includefeaturenotification=true, canvas_allcomments_id=washpost.com/km4ey0dajm, comments_period=14, defaultsort=reverseChronological, includevoteofftopic=false, allow_videos=false, includesorts=true, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, childrenitemsperpage=3, includeheader=true, includeverifiedcommenters=true, defaulttab=all, includerecommend=true, includereport=true, maxitemstop=2, source=washpost.com, allow_photos=false, maxitems=7, display_ugc_photos=false, includepause=true, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!!

UGC FROM ARTICLE: !!!

FINAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=m6yzjj840m, display_more=true, moderationrequired=false, includefeaturenotification=true, canvas_allcomments_id=washpost.com/km4ey0dajm, comments_period=14, defaultsort=reverseChronological, includevoteofftopic=false, allow_videos=false, includesorts=true, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, childrenitemsperpage=3, includeheader=true, includeverifiedcommenters=true, defaulttab=all, includerecommend=true, includereport=true, maxitemstop=2, source=washpost.com, allow_photos=false, maxitems=7, display_ugc_photos=false, includepause=true, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!
Show Comments
Most Read Business
Next Story
Christopher Ingraham | May 21