Exchanges: Praeger Sees SERFF Assisting, Expects Many Flavors of Exchanges

"There is concern from a state regulatory standpoint that there will be some market shrinkage – smaller companies will be purchased by some of the larger ones, but, on the other hand, the exchange, create more of a level playing field," Praeger said.

She said that it is "unfortunate" for customers as well as for companies in the states who may have drawn a line in sand, and done no work, and who are tossing the dice as to whether there will be an overturn of healthcare reform either by the Supreme Court of by a Republican landslide in the national election, with a Republican Senate.

Praeger, an elected commissioner whose second term runs until 2014, said Kansas, a GOP stated led by Gov. Sam Brownback, will likely start with a federally facilitated exchange – at least, at first. Much of the decisions regarding whether to start setting up exchanges are done by the governors' offices in states. Kansas had decided to return a $31.5 million federal grant to help develop an online insurance exchange database system.

Health exchange regulations unveiled Monday made clear that consumers in all states will have access to the new system effective Jan. 1, 2014, whether it be through a federal exchange or a state exchange.

"These policies give states the flexibility they need to design an exchange that works for them," stated HHS Secretary Kathleen Sebelius.

Separately, a KPMG poll released March 12, showed that 62% of state government respondents don't know status of exchange development in their state and cite cost and uncertainties as the main challenges in forming exchanges.

Paul Hencoski, KPMG's National Health and Human Services Leader, who advises states on setting up the so-called Health Benefit Exchanges, said KPMG has identified 212 separate provisions of the healthcare reform law that require state government action. 

 "What's interesting is the fact that a combined 32% of respondents indicated that either political concerns or uncertainty regarding the future of the legislation as the primary challenge,"  Hencoski stated. "….However, waiting creates the risk that there simply won't be enough time to have a state exchange operational by the 2014 deadline."

Some 26 states have challenged the act in court and about one third of states have not made substantial progress to prepare for the exchanges – and the timeline for implementation is short, Hencoski noted.

The KPMG survey was conducted as part of a Feb. 21.

This version corrects a SERFFrevnue number. SERFF provided 5%, not 20%,  to the NAIC's budget. Also, comments for the exchange white paper clsoed a year ago.