With a growing number of state leaders saying they will leave it to the federal government to handle a crucial element of President Obama’s health-care law, even supporters of the statute are wondering if the administration is up to the job.
The administration has released few details about the complex computer systems needed to operate exchanges for states that don’t want to run them. The exchanges — online marketplaces for consumers and small businesses to buy insurance — are supposed to be up and running by Oct. 1, 2013, for coverage that will begin in January 2014.
Joel Ario, who until a year ago was the federal official overseeing development of the exchanges, said that while he is optimistic, he isn’t certain that the federal government will be ready by October.
“Anybody who tells you for sure . . . is ill-informed, because this is still a work in progress,” said Ario, who is now a health-care consultant.
But Michael Hash, director of the office of health reform at the Department of Health and Human Services, said, “We have the contractors in place, and we’re on track to meet the deadlines that are necessary to make the exchanges operational.”
Under the law, states have three options: They can set up the exchanges themselves, create them in partnership with the federal government or cede control to federal authorities.
The exchanges are fundamental to the law’s goal of expanding insurance coverage. Millions of people who aren’t covered by employer-sponsored health plans will get federal subsidies to buy insurance through their state’s exchange. Those whose incomes aren’t low enough for subsidies could still benefit from the competition among insurers that the exchanges are designed to foster.
States that decide to set up their own exchanges must inform the federal government by Friday. So far, about 14 have indicated definite interest, and six more are likely to do so.
States that decline to set up their own exchanges have until Feb. 15 to decide whether to pursue a federal partnership or have Washington take over the entire chore.
At least 13 states have announced their intention to leave the job to the federal government. They include Alabama, where Gov. Robert Bentley (R) became the latest to join those ranks Tuesday.
Experts say the federal government has an interest in persuading as many states as possible to agree, at minimum, to a partnership. That’s because the aspects that the states would handle are labor intensive and customized to each state — making them more difficult for federal authorities to deal with. These tasks include deciding which health plans can be sold on the exchanges and monitoring plans’ compliance, as well as providing outreach and assistance to consumers.
The latter will require setting up large call centers and walk-in offices, with staff members trained in the minutiae of insurance regulation.
Bruce Caswell, who runs the health-services segment of Maximus — a Reston-based firm that works on large government data systems and is bidding on a federal contract to assist the exchanges — suggested that the government may have to rely heavily on private contractors.
He recalled setting up a call center with hundreds of consumer-assistance staff members in Texas when that state moved 2 million people into different programs under Medicaid, the state-federal health insurance program for the poor and disabled.
“We had to find a facility, outfit it, recruit and train staff, take in all the work, and then shut it down six or seven months later,” he said. “That’s the kind of agility that would be difficult without a public-private partnership.”
Ario, the former federal official, estimated that at most, the federal government could oversee consumer assistance and plan management for about half the states. If the number exceeded that, he said, “it would be an incredible resource drain.”
Health and Human Services officials disputed that. They said the administration’s reason for encouraging states to take charge of plan management and consumer assistance is to leverage their expertise and give them the largest possible role — not to relieve the federal government of a potential burden.
Meanwhile, experts say that one of the toughest jobs for the federal government in states where it operates the exchanges fully or in partnership will be building the system that figures out whether applicants are eligible for federal subsidies or Medicaid. The system, for which the government has contracted with the health-care IT firm CGI, will have to be customized to seamlessly work with each state’s existing Medicaid enrollment system.
Across the country, states have been using federal money to modernize those systems, but it’s unclear how much they have progressed.
“In many states, the Medicaid system is the best technology that the 1980s could offer,” Caswell said. For example, the systems may have the capacity to send large batches of data only each night — whereas the law envisions real-time processing of applications.
The same issue could plague another component, a “federal hub” that the administration must build to serve all state exchanges, regardless of who runs them. The exchanges will connect to the hub to check information provided by applicants — income or immigration status, for example — against federal databases.
Taken together, “these are systems that typically take two or three years to build,” said Kevin Walsh, managing director of insurance exchange services at Xerox. “The last time I looked at the calendar, that’s not what we’re working with.”
Adding to the uncertainty is the fact that federal officials have yet to publicly unveil even early prototypes of these federal systems.
State health officials in Arkansas, who have been working with their federal counterparts on a partnership exchange for months, said they have been told that the federal hub — which the administration has contracted tech firm QSSI to produce — has progressed enough for them to begin testing. But the state is only now selecting the vendor that will build its side of the interface.
Nonetheless, the state’s director of planning for the exchange, Cynthia Crone, said the signals she has been getting from federal officials inspire confidence. “The general sense I get is that they’re going to get done on time,” she said. “Not all of the pieces have been fit together, but it’s going to happen.”