HHS Offers States Even More Flexibility To Establish Health Reform’s Exchanges

State health officials met with federal regulators at the Department of Health and Human Services today to discuss new regulations that would provide states with additional flexibility for establishing the exchanges that are part of the Affordable Care Act — new marketplaces for uninsured Americans to compare and purchase comprehensive health insurance coverage beginning in 2014. Under the law, states have significant leeway in shaping exchanges that meet the unique needs of their marketplaces, but face federal intervention if they ultimately fail to enact reform.

Since only 10 states have passed exchange legislation, the federal government today issued new rules that it hopes would encourage more states to act. The draft regulations build on the federal-state partnerships HHS announced this summer and aim “to give the states another option as they establish exchanges that are well-suited to their local market conditions and also help them transition into operating those healthcare insurance marketplaces.”

And so under these rules, a state that is reluctant to build an exchange on its own could choose to share responsibilities with the federal government. For instance, states could be responsible for “managing the participation of health plans, helping consumers navigate the system, or both” with the federal government. Alternatively, “states would take charge of in-person assistance and manage people who will help consumers navigate the new system” while HHS would handle “eligibility and enrollment, with the goal of achieving a seamless experience, where people can move between Medicaid and private insurance coverage on an exchange as their income situations change.”

HHS hopes that the new regulations will encourage more states to build their own exchanges — the structural foundation of the entire Affordable Care Act — and undercut conservatives’ claims that the law does not offer states enough flexibility. After all, if too many states fail to comply, it will be very difficult for HHS to move forward with implementation, particularly since it has limited resources with which to run exchanges in the states.