Despite continued uncertainty surrounding the future of last year's healthcare reform law, more than half of states are forging ahead to establish health insurance exchanges.
Nearly $220 million awarded for exchanges
Last week, HHS announced it had awarded almost $220 million in insurance exchange grants to 13 states to help them get up and running by the 2014 target date. There are a host of state exchange-related grants, including planning grants, which have been awarded to 49 states (all but Alaska) and Washington, D.C., while seven states have received early-innovator grants for health information technology purposes. States that have shown progress with their planning grants qualify for one-year “level one” exchange establishment grants, and “level two” establishment grants provide multiyear funding to states that are further along in the process.
“What's interesting to me is that with this new announcement of awards, we're now up to 29 states that have received level one establishment grants to set up state-based exchanges,” said Jennifer Tolbert, director of state health reform at the Henry J. Kaiser Family Foundation. “Also of note: one state, Rhode Island, in this recent announcement, received level two, which will take the state through 2014 to full implementation of their state exchange.”
Twelve more states received level one funding, in various amounts, last week: Alabama, Arizona, Delaware, Hawaii, Idaho, Iowa, Maine, Michigan, Nebraska, New Mexico, Tennessee and Vermont.
“From the federal perspective, the requirements are the same across all states,” Tolbert said, referring to the criteria for funding. “But the policies within each state differ. Some states that have received level one grants have been prohibited from spending that money,” she continued. “The internal dynamics—both political and operational—differ across the states. Rhode Island has set up their exchange in a way the exchange has the authority to pursue that level two grant.”
Meanwhile, several states that are challenging the legality of the Patient Protection and Affordable Care Act have accepted funding to establish exchanges. That's the case in Nebraska, where state officials oppose the law. The state has received a planning grant and a level one grant in the amount of $5.4 million.
“Why, in this time of constrained budgets, would the governor ask for $5 million more for an idea he opposes, refuses to implement and wants to repeal?” Sen. Ben Nelson (D-Neb.) said in a weekly conference call with local news media, according to a news release from Nelson's office. “Perhaps he should send it back.” Nelson added that those funds should not be spent until the state has a plan in place for an exchange.
Dave Heineman, Nebraska's Republican governor, responded in an interview with a local newspaper that his administration would not build an exchange until the U.S. Supreme Court rules on the law but would plan a system “to protect Nebraska from a federal takeover.”
In August, Kansas Gov. Sam Brownback, also a Republican, said he would return the $31.5 million exchange grant the state received as an “early innovator,” saying the requirements that came with the money were onerous.
Regardless of what the U.S. Supreme Court decides next year regarding the Affordable Care Act's constitutionality, states are not precluded from setting up their own exchanges, Tolbert noted. Massachusetts and Utah, for example, have set up exchanges independent of the law.
HHS also announced a six-month delay in the deadline for states to apply for federal funding to help them implement exchanges and a clarification that states will still be eligible for other exchange grants even after the January 2013 deadline they face for federal certification.
Melinda Dutton, a partner in the healthcare division of consulting firm Manatt, Phelps & Phillips, noted that a list of frequently asked questions that HHS published in conjunction with the announcement provided more guidance. For example, HHS offered information about what a state and federal partnership might look like.
Even though last week's funding and guidance from HHS could prove helpful to states, there is no guarantee that they will be fully operational in two years.
“While there are a handful of states making significant and important progress, a lot of states are again still more in the initial planning stages,” she said. “So there is a real question as to whether states will be fully ready on Jan. 1, 2014.”
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