Reform Update: States wary of opening new exchanges as grant deadline looms

Only two additional states—Idaho and New Mexico—plan to begin operating their own insurance exchanges when the 2015 open-enrollment period starts on Nov. 15. That will leave 35 states relying on HealthCare.gov for the next round of insurance sign-ups now that Oregon appears to have decided to abandon the state's disastrous online marketplace in favor of the federal option.

The Cover Oregon board was scheduled to determine Friday whether the website can be fixed in time for the 2015 open-enrollment period or if it should cut its losses. But the Washington Post was reporting Thursday that the state would opt to shut down the site.

The small number of states interested in starting new exchanges is not particularly surprising given the brief window between the chaotic close of the 2014 enrollment season and next year's sign-up period. But it also appears that few, if any states are taking steps to develop a state-based exchange in future years. And time is running out for states to secure federal funding to develop their own online marketplaces.

Under the Patient Protection and Affordable Care Act, those grants must be awarded by the end of 2014. The deadline set by HHS for applications is Nov. 14.

The only state that appears to be actively considering whether to move forward on an exchange is Illinois, where Democrats control both legislative chambers and the governor's office. Legislation that would allow the state to proceed with a grant application has passed the state Senate. But the sticking point has been the House, where influential Speaker Mike Madigan has shown little enthusiasm for the endeavor. Madigan is often at odds with the state's governor, fellow Democrat Pat Quinn, who faces a tough re-election race this fall.

Jim Duffett, executive director of the Campaign for Better Health Care, which favors a state-based exchange, argues that Illinois could tap $300 million to $500 million in federal grant dollars and create 1,000 jobs if it moves forward. At least 40 House Democrats have signed pledges of support, he said, and they hope to add to that list when legislators return from the Easter and Passover break next week.

“I think we are still at a 50-50 chance,” Duffett said, noting that the Legislature is scheduled to adjourn May 31. “The door's not closed.”

The lack of enthusiasm for creating state-based exchanges undoubtedly reflects the troubles that some states have already encountered in developing their own online marketplaces. In addition to Oregon, Hawaii, Maryland, Massachusetts and Vermont were plagued by major problems with their websites during the 2014 open-enrollment period.

But other state-based exchanges had some of the most robust open-enrollment periods in the country. California, Connecticut, Kentucky, New York and Washington were among the notable successes.

Sonya Schwartz, a research fellow at Georgetown University's Center for Children and Families, has been tracking the issue and points to another explanation as to why states are reluctant to move forward with their own exchanges despite the enticement of federal dollars. “The real reason they won't do it is politics,” Schwartz said. “It's really just political and not whether the federal exchange is any good or not.”

More than 150,000 individuals signed up for coverage through Washington state's insurance exchange during the open enrollment period. Roughly three-quarters of those enrolling in coverage were eligible for federal subsidies. About a quarter of applicants were between the ages of 18 and 34. More than half of applicants opted for a silver plan, which is designed to cover 70% of healthcare costs. Premera Blue Cross captured roughly 70,000 enrollees. Three other plans—Coordinated Care Health, Group Health Cooperative and LifeWise Health Plan of Washington—picked up more than 20,000 members each, the state reported.

Residents in four southern states with closely watched 2014 political contests—Arkansas, Kentucky, Louisiana and North Carolina—broadly disapprove of the Affordable Care Act, according to a poll conducted by the Kaiser Family Foundation and the New York Times Upshot, a site that specializes in data-based reporting. But more respondents indicated support for fixing the federal healthcare law than repealing it. Support for the law ranged from 29% (Arkansas) to 38% (North Carolina), while disapproval topped 50% in all four states. But a majority of respondents in three of the states—Kentucky, Louisiana and North Carolina—backed making changes to the law, while a plurality supported that course of action in Arkansas.

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