Healthcare Business News

Under pressure to run insurance exchanges, states wary of glitches

By Paul Demko
Posted: July 28, 2014 - 8:00 pm ET

New Mexico has decided to stick with for 2015. Given the vast technology problems many state-based exchanges experienced during the first open-enrollment period, state officials there and elsewhere remain wary of running their own websites.

New Mexico's exchange board voted 11-1 on Friday to delay enrollments in the state's website for another year.

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Dr. Martin Hickey, a member of the board and the CEO of not-for-profit insurer New Mexico Health Connections, said the board wanted more time to test out the state’s technology before moving forward.

“Nothing works right the first time,” Hickey said. “We did not want to take that risk.”

New Mexico Insurance Superintendent John Franchini, who also sits on the exchange board, offered a similar perspective. “The citizens of New Mexico deserve to have a platform that we are really, really sure will work correctly,” Franchini said. “We don’t know whether our state-based system is going to be ready in time to do that. Why risk it?”

Both Hickey and Franchini said the ruling last week in Halbig v. Burwell, which raised the possibility that residents in states without their own exchanges could lose access to subsidies, wasn’t a factor in the decision. That’s because New Mexico is already deemed a state-based exchange by HHS despite its reliance on

But the ruling is causing consternation in other state capitals because it could mean the loss of subsidies worth $36 billion to 7.3 million individuals in 2016, according to an analysis by the Urban Institute. However, given the vast technology problems that many state-based exchanges experienced during the first open-enrollment period, there continues to be apprehension among state officials about creating their own websites.

Idaho is alone in moving ahead with plans to transition from to its own website for the 2015 open-enrollment period, which begins on Nov. 15. But officials there are running into a different problem: a lack of data from the CMS.

State officials are still waiting on enrollment data on the 76,000 individuals who signed up for coverage during the 2014 open enrollment. That information is needed in order to ensure a smooth process for policy renewals. So far state officials have only received names and e-mail addresses for enrollees, which isn’t enough information to allow for re-enrollments.

Idaho officials are concerned even though the CMS has assured them that the data is forthcoming and will arrive in time to allow for an orderly transition.

“Time is running out. We have to have control of our own destiny,” said Dick Armstrong, director of the Idaho Department of Health and Welfare, at a board meeting in Boise on Friday, according to a report in the Idaho Statesman. “If we keep waiting, we won't have time."

Idaho and New Mexico could still be joined by other states seeking to transition to a state-based exchange. Experts have suggested that some states—particularly the seven that currently have “partnership” exchanges—may be able to easily fulfill the requirements to meet the definition of a state-based exchange in order to ensure that they can continue accessing subsidies. Two states that had problems with their own websites for 2014 enrollments, Nevada and Oregon, are planning to switch to for the next open enrollment period. But they are still considered state-based exchanges.

Arkansas appears to be the closest to joining them. State legislation enacted last year created a board of directors to explore establishing a state-based exchange.

According to Cheryl Smith, executive director of the Arkansas Health Insurance Marketplace, the organization expects to file a grant application next month seeking $90 million to $130 million from the federal government to implement a state-based online marketplace that could be operational as soon as the 2016 open enrollment period.

Arkansas state Sen. David Sanders, a Republican who chairs the Arkansas Health Insurance Marketplace Legislative Oversight Committee, said the state won’t change course because of the legal uncertainty hanging over the subsidies. “It is not the primary motivating factor that we have right now,” Sanders said. “We’ve not gotten where we are today by simply taking what has been handed to us by the federal government.”

Illinois is another state with a partnership exchange that could move forward with plans to eliminate its dependence on Democrats control all branches of government at the state Capitol in Springfield. Earlier this year, the Senate passed legislation that would have established a state-based exchange, but the bill never cleared the House. Some legislative backers of the bill have indicated that they will push to bring it up during a short legislative session in November.

“We need to move forward,” said Jim Duffett, executive director of the Campaign for Better Health Care, which has been lobbying for the legislation. “The votes are there.”

Most states are reacting cautiously. Officials point out that there is no immediate impact from the Halbig case and that another federal court determined in a ruling issued on the same day that the subsidies were legal. Any final determination on the issue is certain to take months to resolve.

“We’re not expecting any immediate impact on those people receiving subsidies and we are proceeding toward the fall enrollment,” said Tom Alger, a spokesperson for the Iowa Insurance Division, another of the partnership states. “We’re certainly going to be monitoring this.”

Follow Paul Demko on Twitter: @MHpdemko

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