‘Flexibility’ may help states meet key part of health-care law

Kiichiro Sato/AP - Obama officials want to offer leeway in creating insurance ‘exchanges.’

By N.C. Aizenman,

Faced with the possibility that many states may not be ready to meet a crucial requirement of the federal health-care law passed last year, the Obama administration has proposed rules redefining what “ready” means.

To boot, officials did just that in a setting designed to win over that most politically sought-after of groups: small-business owners.

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The health-care law set a deadline of Jan. 1, 2013, by which federal officials must decide whether each state will be capable of getting its insurance marketplaces — also known as “exchanges” and the backbone of the new system — up and running by 2014. If a state doesn’t make the grade, the law directs the federal government to step in with its own version.

But with many Republican state leaders suing to overturn the law and governors who support it facing logistical difficulties, meeting the 2013 deadline is looking increasingly challenging.

The regulations proposed Monday address that issue by trading the club of federal intervention for the carrot of increased “flexibility.”

States that are not quite on track but at least appear likely to have their exchanges operational by 2014 could get “conditional approval” of their plans; states that have only some of the pieces in place would be able to create partnerships that draw on the federal versions of, for instance, IT systems; and states that initially cede full control to the federal government could still establish exchanges down the line.

Analysts on all sides of the debate said the move makes political and practical sense.

“States are in a heck of a pickle in terms of whether they should implement these exchanges, because there’s so much that’s still unknown: Will the health law go into effect? Will a Republican administration be the one to implement it after 2012?” said Robert Laszewski, a health policy specialist with clients across the health-care industry. “So [Obama officials] want to give as many of these states the possibility of implementing once the unknowns become known.”

Administration officials denied any concerns over the pace of state preparations. They noted that 10 states have enacted legislation to set up exchanges, six others are moving forward without new laws, and the ranks of these early adopters include Republican-led states.

Instead, in a rebuff to critics who say the law imposes a one-size-fits-all approach, the officials said the new rules are part of a larger effort to craft regulations in a way that will give states maximum leeway.

Other examples proposed Monday: Although the law requires insurance plans on the exchanges to offer an “adequate” network of doctors and other providers, the administration would leave it to states to define that term. States would also decide whether to let in every plan that meets minimum standards or to limit participation to those with the highest quality or value.

(Less pleasing to proponents of greater state power: the law’s mandate that plans sold on the exchanges cover a package of minimum essential health benefits. But the rules detailing what those benefits will include won’t be issued until later this year.)

 
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