The proposed rule spells out requirements states must meet if they opt to launch an exchange, or online marketplace of qualifying insurance plans. The federal government will launch exchanges in states that do not do so by 2014. The regulations also outline the minimum coverage health plans must provide in order to participate in any exchange.
“I think what the regulation sets out is a framework that says every state may choose a little bit different option," HHS Kathleen Sebelius said in a news conference at a Capitol Hill hardware store. "We sent out some minimum standards, but the fact that some states may choose the active purchaser, like Massachusetts, and other states may use an open market, like Utah, is perfectly allowable and flexible," she added. "And again, I think it's important—these are choices of private insurers in an active market. This is not government insurance. It really is the private plans and again that's really going to be a state-based stratetgy and choice."
Finally, the proposed regulations spell out which companies may purchase coverage for their employees through the exchange. The healthcare reform law allows both individuals and employees of firms with 100 or fewer workers to purchase coverage—usually subsidized by taxpayers—on the exchange.
Steve Larsen, deputy administrator and director for CMS' Office for Consumer Information and Insurance Oversight, said at Monday's news conference that states will still have the option of developing their own exchanges even if they are not prepared for a federal review in January 2013. “We do clarify in this regulation that if a state does not happen to be ready for its readiness review in January '13 or for 'go live' in January 2014, then a state still does have an opportunity to come in a year later as long as they provide us with 12-months notice and a transition plan for us to transition form the federally facilitated exchange to a state-based exchange,” Larsen said.
Meanwhile, Joel Ario, who serves as the director of the office of health insurance exchanges at the Office for Consumer Information and Insurance Oversight, said there are two main priorities this year for states to establish exchanges. The first is to adopt some form of governance structure, which he said 10 to 12 states have done already. "A second important step early on is the development of the IT infrastructure toward the exchanges," Ario said. "Thirty states have started that process and are moving forward at varying levels.”
(Please see today's cover story Against the clock about the pressure states face to meet deadlines regarding insurance exchanges.)