Leading state insurance regulators wondered aloud during a press conference of the National Association of Insurance Commissioners, held Tuesday in Washington, how states can muscle past a possible rejection by the Supreme Court of the individual mandate under health care reform, yet still have state health exchanges remain viable. What no one at the event could figure out was how to contain health insurance costs without more Congressional fixes if the exchange ever came to be.
Half of the states (26) at most, including the District of Columbia, will be ready for open enrollment in October 2013 for a begin date of the following year, according to the most recent NAIC tally. Exchanges will remain part of the law under all but one option—if the entire law is overturned, one insurance lawyer noted.
Health care lobbyists estimated that 12 or 13 states have moved beyond the legislative adoption or decree, and beyond the initial grant awards, to start the back office and information technology work needed to set up an exchange. But the lobbyists questioned whether the 26 counted is too generous a number to make it to the finish line by Jan. 1, 2014.
The Patient Protection and Affordable Care Act of 2010 calls for federal and state agencies to set up state-based health insurance exchanges, or Web-based insurance supermarkets, that will sell coverage to individuals and small businesses.
Under PPACA, states are to choose whether to run their own exchanges, participate in multi-state exchange consortiums or let the federal government provide exchange services for their residents.
Insurance commissioners said that it was too late for states that cannot meet the deadline to control exchanges at the state level. At best, they can have a state-federal partnership and must give notice after the presidential election in November. Otherwise, the federal government will take over their exchanges, and implement their platforms, in the states.
For example, Republican New Jersey Gov. Chris Christie, recently vetoed state Assembly Bill 2171, legislation that would create a health insurance exchange, or Web-based insurance marketplace, in his state. Christie said the state should wait until the U.S. Supreme Court rules on PPACA before creating an exchange.
But according to the commissioners who spoke Tuesday, it is too late to begin a state-based plan if states have not yet begun work on one; and if the law is upheld in part because of the complexity of setting them up and because of the heavy investment in time and infrastructure needed.
It is a "very elaborate computer system," one commissioner noted. "If a state hasn't already started development, it is too late to do a state-based exchange."
If the federal government takes over the exchanges, which must be self-sustaining after a period of time, other questions remain. Among them: Where will the money will come from? Who will collect the funds? And by what method?
Adam Hamm, vice present of the National Association of Insurance Commissioners (NAIC), told reporters at the press conference that while NAIC Health Insurance (B) Committee Chairperson Sandy Praeger took a glass half-full approach to a mandate-less health reform law, there were a "number of us with grave concerns" related to enormous pressure to increase rates starting as soon as 2013.
Hamm, the Republican North Dakota insurance commissioner (who is up for re-election this year) compared a striking down of the mandate, to pulling a pin on a hand grenade and putting the grenade in the lap of the American people. Hamm also echoed the Administration's argument that the mandate and requiring insurers to take all comers are interconnected. He noted also that a dangling guaranteed issue, unmoored from the individual mandate, would not work due to skyrocketing costs.
