States get more time to decide whether to build health exchanges

One day before states were required to tell the federal government whether they would build their own health insurance exchanges, the Obama administration on Thursday extended the deadline for one month at the request of Republican governors.

The decision came in response to a Wednesday letter from Virginia Gov. Robert F. McDonnell and Louisiana Gov. Bobby Jindal asking President Obama to push back the impending deadline. The two governors made the request on behalf of the Republican Governors Association; both have said their states will not set up an exchange.

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In a letter addressed to McDonnell and Jindal, Health and Human Services Secretary Kathleen Sebelius wrote, “We’re confident Governors will have enough time to decide whether they want to establish an Exchange, work in partnership with the federal government or have a federally-facilitated Exchange in their state.”

States had faced a Friday deadline to notify the federal government whether they intended to operate the new insurance marketplace at the heart of the health reform law. They now have until Dec. 14 to make that decision.

The Obama administration had already extended until mid-December the deadline for states to submit detailed “blueprints” on how they would run their exchange. This letter extends the time for each state to declare whether it will run its insurance exchange.

For states that decide not to set up the marketplace, the federal government will come in and take over the task. States also have the option of running a partnership exchange, in which they would split responsibilities with federal officials. To go that route, states must notify the federal government by mid-February.

Since the election, many Republican governors have decided not to set up their own insurance exchanges. Nebraska and South Carolina announced Thursday they would leave their exchanges to the federal government. Governors in Kansas, Alabama and Florida have made similar decisions within the past week.

Still others are waiting to make their decisions: At least a half-dozen governors have yet to announce whether they will proceed with the exchanges or leave the task to the federal government.