Minnesota And Alaska May Be In A Catch-22 When It Comes To Establishing Health Exchanges

This morning, HHS released its “Initial Guidance to States on Exchanges,” in which it defines and summarizes the statutory requirements for establishing the new health insurance market places in 2014:

Beginning with an open enrollment period in 2013, Exchanges will help individuals and small employers shop for, select, and enroll in high-quality, affordable private health plans that fit their needs at competitive prices. Exchanges will assist eligible individuals to receive premium tax credits or coverage through other Federal or State health care programs. By providing one-stop shopping, Exchanges will make purchasing health insurance easier and more understandable.

States have a lot of discretion in how the construct their exchanges and the federal government has already issued its first batch of planning grants to help states build their unique market places. More funds will be available next year, once state legislatures across the country pass legislation establishing the exchanges. But the two states that did not apply for the funds in protest of health reform — Minnesota and Alaska — may have a hard time receiving new dollars, the guidance suggests:

Forty-eight States and the District of Columbia were awarded their first Exchange grants under Section 1311 in September 2010. Those grants were for planning purposes and the next round of grants will be for the purpose of establishing an Exchange. The opportunity to apply for grants will be announced in February 2011 and will become available on a rolling basis throughout the next three years. States will have to meet certain milestones in order to be awarded grants in 2011, and the size of State awards may be related to the number of milestones met. States that are not able to meet required milestones by spring 2011 may apply for grants later in the year. Necessary Exchange costs will be fully funded by HHS until 2015. After January 1, 2015, Exchanges must be self funded.

The problem is, Minnesota and Alaska would have to meet certain benchmarks without federal assistance in order to receive new funding. Should they fail to do this and find themselves unable to construct their own exchanges, “now or at a later point in the process,” “HHS will work with the State to establish an Exchange,” the guidance reads.

The federal government may not be exactly taking over, but ironically by resisting planning grants these Govs. Tim Pawlenty (R-MN) and Sean Parnell (R-AK) may be ceding at least some control to the federal government, bringing about the very kind of “government takeover” that they have been protesting by resisting these funds in the first place.