States Urged to Prepare for Health Insurance Exchanges

With the looming deadline to create health insurance exchanges, states are being encouraged to do all they can this year to prepare for their successful launch in 2014. Health insurance exchanges were created under the Affordable Care Act to function as a marketplace for health insurance consumers, providing them with options for health coverage. The goals of the exchanges are to offer a variety of qualified health plans and provide information and educational services to help health insurance buyers understand their choices. States will have the option to establish one or more state or regional exchanges; to partner with the federal government to run the exchange; or to merge with other state exchanges. If a state elects not to participate in an exchange, the federal government will create the exchange in the state.

Although the law’s most important changes will not take effect until 2014, states and health insurers must prepare to sign up a projected 32 million people on Medicaid and private insurance. Yet, states are still missing critical information from the federal government, such as key pieces of direction, from what various insurance exchange options will look like to which benefits must be included in health plans.

This year, the main concern for states is to create the exchanges, through which small businesses and individuals can buy health coverage starting in 2014. On Jan. 1, 2013, the U.S. Department of Health and Human Services (HHS) will confirm which states will be prepared to run exchanges on their own. For a state to achieve accreditation, it must pass laws to fund the ongoing processes of an exchange. While the federal government will offer initial financial support for the establishment of exchanges, states will have to budget for those fees once they are under way. HHS can issue a provisional certification for those states that are making headway but need additional time.

While some states are advancing toward exchange creation, most are unsure, and a few have decided to pull away from the idea altogether. Initially, the only other option to a state exchange was a total federal unit, but HHS has offered to join with states so that they can preserve general control of an exchange while giving certain responsibilities to the federal government.