States’ Health Insurance Exchanges Are Shaking Out
States have made their decisions on health insurance exchanges. The next two deadlines are open enrollment beginning Oct. 1, 2013, and plan coverage beginning Jan. 1, 2014. Seventeen states and Washington, D.C. – mostly in the West and Northeast – are going with state-based exchanges. Twenty-six states – mostly in the Midwest and South – have deferred to federal exchange operation. The remaining seven states will operate their exchanges in partnership with the federal government.
Download the Excel Version of the Table: "Status of State Health Insurance Exchanges Required Under the Affordable Act"
The last deadline for states to decide just how much they are going to be involved in operating health insurance exchanges passed on Feb. 15, 2013. That was the last day for governors to send letters to the U.S. Department of Health and Human Services declaring that their state would work in partnership with the federal government.
- Governors in New Hampshire and West Virginia submitted letters Feb. 13 and 15, respectively, declaring their intentions to operate health insurance exchanges in partnership with the federal government. Federal approval is pending.
- Five other states—Arkansas, Delaware, Illinois, Iowa and Michigan—previously submitted proposals to operate a joint exchange. Federal approval is pending for Iowa and Michigan.
- California, Colorado, Connecticut, Hawaii, Idaho, Kentucky, Maryland, Massachusetts, Minnesota, Nevada, New Mexico, New York, Oregon, Rhode Island, Utah, Vermont and Washington will operate state exchanges.
- Massachusetts and Utah already had state health insurance exchanges established by legislation before Congress passed the Affordable Care Act in March 2010. Ten states approved legislation to operate the exchange in the 2011 or 2012 legislative sessions.
- Three states—Kentucky, New York and Rhode Island—established the exchanges by executive order.
- State legislation to establish state exchanges is still pending in Idaho and Minnesota.
- Mississippi is the only state whose plan for a state-based exchange failed to garner federal approval because it was submitted by the state’s insurance commissioner and not endorsed by the governor.
- The states that have opted out of state-based exchanges include many whose governors have been outspoken opponents of the Affordable Care Act since it passed and who joined the federal lawsuit seeking to overturn the law.
- The states that have opted out of operating exchanges include many in the Midwest and South.
- The exchanges must begin open enrollment for individuals and small group health insurance policies on Oct. 1, 2013.
- Policy coverage begins Jan. 1, 2014.
- Individuals qualify for federal tax subsidies only by purchasing insurance through the exchanges. Those subsidies are intended to make health insurance affordable for those people with incomes between 100 and 400 percent of the federal poverty level.
- People who apply to state exchanges for insurance and who are income-eligible for Medicaid will be seamlessly enrolled in Medicaid. Cooperation will be required between the exchange, no matter the administrative authority, and states’ Medicaid programs. In those states that adopt the Affordable Care Act option to expand eligibility to 138 percent of poverty, the exchanges are likely to encounter a number of Medicaid eligible applicants.
- States’ decisions on exchanges need not be permanent. Federal guidance provides that states can apply by Nov. 18, 2013, to take more state control in 2015 or by Nov. 18, 2014, to make a change for 2016.
- In his letter declaring Illinois’ intention to partner in the exchange, Gov. Pat Quinn said, “I am committed to working with the Illinois General Assembly to pass legislation with governance and financing language that will allow us to operate a state-based exchange beginning in 2015.”1
- Hospitals and health insurance companies will likely continue to lobby for states to take more control of their exchanges. Both health care sectors have been outspoken proponents of state-based exchanges, advocating that states are in the best position to run exchanges because of their experience with local markets and insurers and their proximity to individual and business purchasers of health insurance.