Stomachs churned across the country last week after HHS Secretary Kathleen Sebelius unleashed a massive publicity push to notify millions of uninsured Americans that they would soon qualify for “affordable, quality healthcare coverage.” There's little evidence to suggest states will be ready to open the insurance exchanges needed to meet the anticipated rush.
“They are tearing their hair out,” said one health insurance exchange consultant about officials in states awaiting the long-delayed federal information needed for launching their insurance marketplaces.
The publicity campaign, which included a redesigned enrollment information website and a multimedia promotion effort, is the latest sign that the major coverage expansion at the heart of the Patient Protection and Affordable Care Act is fast approaching. It is ramping up pressure on states that are either planning or contemplating to launch health insurance exchanges.
Those exchanges are at the heart of state and federal efforts to offer affordable health insurance plans to more than half the estimated
16 million previously uninsured Americans expected to take advantage of the law in its first year. The remainder will receive coverage through expanded state Medicaid programs
—at least in those states that choose to accept federal funding for the effort.
The tightening time frame for building the exchanges has brought into sharper focus myriad questions the federal government still hasn't answered and the logistical challenges inherent to such a historic expansion of private insurance coverage.
“Imagine just a million people who have never filled out those kinds of forms before and don't know how to shop and haven't gone through open enrollment once a year for their entire adult lives,” said Jordan Battani, a managing director at Computer Sciences Corp., which is providing consulting services to states on the startup of exchanges. “They're all hitting the water at the same time on Oct. 1 trying to use these systems. It's hard to imagine how this could happen on time.”
Top insurance industry executives agree the states face daunting odds in meeting the ACA's deadlines. The ability of federal and state health insurance exchanges to begin enrolling millions of consumers in nine months “seems challenging,” Stephen Hemsley, CEO of UnitedHealth Group, told stock analysts last week.
The pressure has spawned repeated speculation that various exchange-related regulatory deadlines will be delayed. Last week, rumors swept the country that the Feb. 15 deadline for states to submit partnership exchange applications had been extended. States have the option of forging a partnership with the federal government or neighboring states.
Federal officials moved quickly to quash the rumors. “We've been getting lots of questions about this. … There have been absolutely no changes in policy,” Amanda Cowley, acting director of state health exchanges at HHS, told state health officials in an e-mail.
But misunderstandings abound, especially in states that are moving in opposite directions on exchanges and Medicaid expansion. Last June, the U.S. Supreme Court gave a green light to the exchanges by upholding the law's individual mandate, but gave states the right to opt out of the Medicaid expansion.
For instance, Mississippi Insurance Commissioner Mike Chaney applied to launch a state-run exchange against the wishes of the state's Republican leadership. He told the governor and state legislators that the state-run exchange will be needed to keep the federal government from forcing unwanted growth in the state's Medicaid program.
“A federally facilitated exchange will increase the federal government's involvement in Medicaid eligibility,” he told Modern Healthcare in an e-mail. “And while they cannot expand Medicaid under PPACA, they could use new Medicaid eligibility and enrollment rules to increase current Medicaid rolls.”
A CMS official said the federal government does not have the authority to grow a state's Medicaid rolls against its wishes.
Such types of misunderstandings followed HHS' decision to withhold most details about how they plan to run the federally operated exchange, which will cover every state that does not operate either its own exchange or one in partnership with the federal government. “A lot is riding … on the federal government getting the federal exchange up and running, but I wouldn't bet against the feds on this,” said Heather Howard, director of the State Health Reform Assistance Network, a pro-reform advocacy group. “They have a lot of experience in building systems.”
State officials hoping to meet the Feb. 15 deadline for state exchange plans—and even those hoping for a deadline extension—have continued to plead for details on the federal version. But even without details of the federal exchange, other long-overdue federal actions are needed to provide certainty in key areas, according to health industry officials and policy experts.
One of the elements needed for the operation of both federal and state exchanges as well as expanded state Medicaid programs is an operational federal data hub to help determine eligibility for enrollment and subsidies. The digital link will provide real-time access to the databases of seven federal departments and agencies to verify a range of details, including the incomes and citizenship status of 7 million Medicaid and Children's Health Insurance Program applicants and 9 million exchange applications expected to begin arriving Oct. 1.
“We've heard a lot of questions as to whether or not the federal data hub would be ready on time,” said Cheryl Smith, a director at Leavitt Partners, which provides exchange expertise to a range of states.
The hub's data is also critical for applicants, since they will need to know if they qualify for exchange subsidies or if their income falls below the income threshold that exempts them from new federal tax penalties for failing to carry qualified coverage next year.
States and insurers also need final versions of proposed federal rules governing crucial components of the exchanges, such as the essential health-benefits package. It's making life difficult for firms, since insurance companies typically need about 18 months to develop new plans, according to Robert Zirkelbach, press secretary for America's Health Insurance Plans, the industry trade group. “Health plans are starting, but some of the final rules and regulations are still outstanding,” he said.
Last week, major insurers such as UnitedHealth, Aetna and Humana said their exchange offerings for the individual and small-business market would probably be limited to about half or fewer of the states.
The insurers and state-run health exchanges are awaiting long-delayed technical specifications from HHS for how their information systems are supposed to connect with the federal data systems, Computer Sciences' Battani said. Such details are critical if the millions of applicants are to get a Travelocity-like enrollment experience that provides real-time feedback, instead of the weekslong paper application processes that still characterize many state health programs. “If the will is there to do it, it won't be pretty but you could do it without some of the automation,” Battani said. But “it would be a mess.”
TAKEAWAY: State officials are still waiting on the federal government to provide guidance for setting up insurance exchanges, which are due to begin operations on Oct. 1.