The Massachusetts health insurance exchange, the Connector, looks a lot like what the federal law envisions: It administers subsidies to tens of thousands of Bay State residents and sets standards for what private plans, selling on the exchange, must cover.
The Utah one looks quite different: There are no subsidies; nor are there standards for coverage. State officials like to compare it to a farmer’s market: Health insurers show up and sell their products, and subscribers decide whether to purchase. Utah is pretty hands-off with its exchange, which is run by just two state employees.
The Utah exchange has left the state, and the federal government, grappling with a big question: Can its bare-bones exchange serve as the backbone of the federal health overhaul? How much flexibility the federal Department of Health and Human Services gives Utah could provide clues as to what federal officials will, and won’t, accept from states’ implementation plans.
Utah Gov. Gary Herbert, a Republican, certainly hopes that his exchange will survive the federal health overhaul. “I’m cautiously optimistic our health care exchange will pass muster,” he said in an interview Wednesday.
Herbert had, during the health reform debate, lobbied the federal government to grandfather out his insurance exchange and exempt it from the new law’s regulations. After those efforts proved unsuccessful, he began lengthy discussions with the Obama administration on how best to proceed. He wants to keep the exchange as laissez-faire as possible, while also ensuring that the federal government won’t judge it to be inadequate and take over the task.
“Some states are saying, we’re not going to implement,” says Herbert. “We’ve told people that it’s the law right now, so we need to prepare. If it’s held up as constitutional, we need to be ready.”
The federal government almost certainly won’t let the Utah exchange stand as is, given requirements for exchanges under the Affordable Care Act. The state’s marketplace serves only small businesses right now, while the federal law requires states to allow individuals to purchase coverage. Federal law also mandates that the exchange connects to a state’s Medicaid office; Utah’s Connector does not.
There are other questions for Utah about how much more the state must do: Does it need to become a carbon-copy of Massachusetts and involve itself heavily in insurance regulation? Or can Utah meet the administration somewhere in the middle, perhaps helping administer subsidies but doing less to set plan standards?
Right now, Utah says it’s still far from getting the answers on the administration’s ground rules. While there are multiple regulations on the exchanges, there is little about the consequences for states that don’t comply.
“We don’t have full guidance on the exchange,” says Robert Spendlove, Herbert’s policy adviser. “The governor has been consistently saying we have to have an exchange that works for Utah and that will not change. But they haven’t told us if we’re compliant, what the federal exchange would look like, and, if we don’t comply, what the punishment will be.”
Those are the questions, Spendlove says, “That states need answered.” And that will tell Utah how much it is, or isn’t, expected to look like Massachusetts come 2014.