Earlier this month a new market forecast said nearly $600 million would be up for grabs from state and local governments to help set up health insurance exchanges. But this represents only a small fraction of what some estimates say will be a $4 billion per year exchange industry.
While new and established companies alike are working on projections and positioning themselves to capture part of this emerging industry, less clear is how states will choose to organize their exchange, connect with other federal and state programs, or what effect lawsuits against healthcare reform will have.
During a recent presentation at the University of Maryland, Deloitte’s Dr. Wade Horn highlighted challenges and opportunities facing state officials as they look to implement key parts of federal health care reform. Ironically, the same thing driving lawsuits aimed at repealing healthcare reform will also ensure that most states build their own health exchanges if the law stands, he said.
“July 1, 2014 is the big date for states,” Horn, who is a former assistant secretary for the Administration for Children and Families at HHS, said. July 2014 is when health insurance exchanges must be operational and when expanded Medicaid eligibility rules enacted.
But the Affordable Care Act does not specify who – the federal, the state or a regional cooperative of governments – is ultimately responsible for meeting the deadline. If states choose, they can defer to the federal government to set up the exchange.
Dr. Wade said he expects most states to implement their own exchanges for the same reason they want health reform legislation repealed: federalism. The question then becomes not if states will set up their own exchanges, but what kind of exchange state leaders think politically palatable.
“Some states will look to increase access to a range of government benefits and services…while others will take a light touch approach,” he said.
Thus far, Minnesota and Alaska were the only two states to refuse $1 million grants from HHS to help jumpstart the process.
According to INPUT analyst Amada White, two states have already stood up functional health insurance exchanges – Massachusetts and Utah.
Ms. White indicated that other states like West Virginia, who recently received a $37 million grant, and Wisconsin, who added requirements for a health exchange to a recently awarded determination system contract with Deloitte, are also moving forward.
Wisconsin and West Virginia were among thirteen recipients of additional funding through the State Health Access Program (SHAP), which will send around $70 million to help states enroll low-income families and individuals with health insurance. Other state recipients include Colorado, Kansas, Maine, Minnesota, Nevada, New York, North Carolina, Oregon, Texas, Virginia and Washington.
“Those states are a little further along in the game, strategically and technically,” Ms. White said.
Five of the SHAP grantees who received over $25 million under the program are plaintiffs in lawsuits to repeal the insurance mandate. Minnesota, who is under executive order, not to pursue federal money to implement health care reform received $4.6 million.
Regarding the lawsuits, Ms. White said she did not think they would affect the market, at least in the near-term. She encourages states to push forward with planning, because if not, “They’re really just hurting themselves.”