21 Of 22 States Suing Over Health Reform Begin Planning For Exchanges With Federal Funds

The Department of Health and Human Services (HHS) announced today that it would distribute $49 million in planning grants to help 48 states — 21 of which are suing the federal government over the constitutionality of the Affordable Care Act — “to invest in research and planning to get the Exchanges up and running” by 2014. “In my month on the job, I’ve been out meeting with the sates and I’ve seen near universal support for the exchanges and a strong state interest for moving forward on a state-by-sate basis,” Joel Ario, director of the Office of Insurance Exchange, said on a conference call with reporters, which the Wonk Room attended. Indeed, just two states, Minnesota and Alaska, did not apply for the grants.

The planning grants will give states up to $1 million each to assess their existing IT system, plan for consumer call centers, hire staff and plan and coordinate “enrollment systems across Medicaid, the Children’s Health Insurance Program (CHIP), and the Exchanges,” but the government doesn’t expect most states to establish the Exchanges until 2011. Besides Massachusetts, Utah, and Oregon, all of which already have insurance exchanges (and California has a bill pending), “for most states it’s a 2011 proposition,” Jay Angoff the Director of the Office of Consumer Information and Insurance Oversight said on the call.

“So we’re we’re really looking at 2011 and we do think it’s a critical legislative year opportunity to establish exchanges themselves and the governing structures so you have a body that’s going down the details as you move down 2012 and 2013.” “But we would expect robust activity in the legislative sessions of 2011.” The 48 states that are receiving the grants did not commit to establish their own exchanges by 2014, but all of the states showed an interest in moving forward, Angoff said.

For those that do — and HHS certainly expects that a handful won’t, allowing the federal government to step in — the Commonwealth Fund released a new report today by Tim Jost outlining the various difficulties states will face as their governing boards begin building the exchanges. The report, which is well worth reading, recommends that among other things, that states issue identical regulations of the individual and small-group market outside and inside the exchange to prevent adverse selection, allow the exchanges to be government by independent agencies, and “offer employers the possibility of an aggregated bill covering the premiums of all employees.”