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January 4, 2013

Ten states have filed applications with the Department of Health and Human Services (HHS) to set up state-based health insurance exchange markets under the Affordable Care Act (ACA), according to Department of Health and Human Services Secretary Kathleen Sebelius.

The exchanges are online supermarkets where people can shop for private health insurance and obtain federal subsidies to
help defray the cost. The concept of an exchange is simple: Competition will drive down prices. But operating an exchange is an immense technical challenge requiring sophisticated information technology to digest and display huge amounts of data on the costs and benefits of various insurance plans.

It has been estimated by the Congressional Budget Office that 25 million people will eventually receive coverage through
the exchanges.

States can choose to enter into partnership exchanges with the federal government, in which states conduct plan management and/or consumer assistance functions. The deadline for states to apply to be in partnership exchanges is Feb. 15, 2013.

The deadline for filing “blueprint” applications to operate state-based exchanges (SBEs) was Dec. 14. Blueprint applications for SBEs were filed by California, Hawaii, Idaho, Minnesota, Mississippi, Nevada, New Mexico, Rhode Island, Vermont, and Utah, Sebelius said. HHS is to act on the applications by Jan. 1, 2013.

In addition to the applications for SBEs, HHS gave conditional approval the week of Dec. 10 to Colorado, Connecticut, the District of Columbia, Kentucky, Massachusetts, Maryland, New York, Oregon, and Washington to create state-based exchange. Conditional approval means HHS has found that the eight states and the District of Columbia have made enough progress in setting up their own exchanges for individuals and small group plans that they are likely to be ready to take applications when
open enrollment begins Oct. 1, 2013. Plans sold in the online markets will take effect in 2014.

Under the ACA, HHS will operate federally facilitated exchanges (FFEs) in states that do not set up their own SBEs or enter into state partnership exchanges (SPEs). On Nov. 20, the administration released proposed rules regarding essential health benefits and health insurance markets. On Nov. 30, it released a proposed rule on payment parameters for risk adjustment programs.

Many states, especially those led by Republicans, have balked at creating exchanges to implement the controversial health care reform law. There are 32 states that have chosen to not establish state-based health insurance exchange markets.

The number of states likely to operate SPEs or have FFEs is not yet clear. On its exchange progress map, as of Dec. 17, health care consulting firm Avalere Health LLC estimated that 12 states would be likely to form SPEs: New Hampshire, New Jersey, Delaware, North Carolina, Michigan, Ohio, West Virginia, Tennessee, Illinois, Iowa, Arkansas, and South Dakota.

Twenty states are likely to have FFEs, according to Avalere: Maine, Pennsylvania, Virginia, South Carolina, Georgia, Florida, Alabama, Indiana, Wisconsin, Missouri, Louisiana, Texas, Oklahoma, Kansas, Nebraska, North Dakota, Montana, Wyoming, Arizona, and Alaska.

Avalere estimated that 18 states and the District of Columbia would be likely to have SBEs. Avalere included Utah, which already has an exchange, as likely to operate a SBE. Utah has asked HHS to approve its exchange as an SBE.

On its map “where states stand so far” on exchanges, dated Dec. 17, the National Academy for State Health Policy’s “State Refor(u)m” health reform project lists 18 states and the district having declared their intent to establish an SBE, seven states that are considering or have declared partnerships, and 25 states that have rejected state-run exchanges.

NASHP lists Delaware, North Carolina, West Virginia, Michigan, Illinois, Arkansas, and Iowa as likely partnership states. States rejecting state-operated exchanges are Maine, New Hampshire, Pennsylvania, New Jersey, Virginia, South Carolina, Georgia,
Florida, Alabama, Tennessee, Ohio, Indiana, Wisconsin, Missouri, Louisiana, Texas, Oklahoma, Kansas, Nebraska, South Dakota, North Dakota, Montana, Wyoming, Arizona, and Alaska, it said.  01.04.2013

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