Even if states are ready in time, the federal government will not be, said Cheryl Smith, director of the exchange practice at Leavitt Partners, a consulting firm founded by former George W. Bush administration official Michael Leavitt.
“The 2014 start is untenable for federally compliant exchanges,” said Smith, who previously directed Utah’s health exchange. “They have to verify income, they have to verify residency, they have to verify citizenship, and do that all through different federal agencies. Before [federal subsidies] can flow, every one of those things has to be done.”
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The Obama administration has consistently said the federal exchanges will be ready, although it has produced few details on its progress.
Ario, the former exchange director, said “all signs point to it being ready.” He attended a recent meeting of state insurance commissioners in Washington where federal officials repeatedly encouraged them not only to apply to run their own exchanges but also to consider partnering with the federal exchange as a backup for some functions.
Thomas Scully, a health-care consultant who ran Medicare and Medicaid under Bush, predicted that the federal government would be ready to fill in with exchanges, permanently or temporarily, but still said that a postponement is inevitable as a means of reducing the budget deficit.
That’s because early next year, Congress will have to negotiate a major deficit reduction deal or automatic budget cuts will take effect for everything from Medicare to defense. Scully predicts that those cuts — known as sequestration — will create pressure from Democrats and Republicans alike to do something to slow spending.
To avoid the automatic cuts, Democrats might agree to a one-year delay of the exchanges, he said. That would save money because the federal government would not be spending tens of billions of dollars to help low- and moderate-income Americans buy coverage.
“There will be a nasty, ugly spring with debt-limit increases, and the pot will boil all spring and summer [next year],” Scully said. “Democrats will say they’ll never ever touch the health-care bill, and Republicans will say they’ll never ever raise taxes. Then there will be a deal.”
Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.