Virginia stalls health insurance exchange

Virginia is stalling out on its health insurance exchange plans. Governor Bob McDonnell’s administration has indicated that it will not push lawmakers to create a state-run health insurance exchange during the 2012 session. Despite that, some legislators are working on a placeholder measure that would ensure that the state maintains control of its exchange.

According to federal health care reform legislation, states have two options on health insurance exchanges – either create their own by the 2013 deadline and maintain control or become part of a large, generic exchange administered by the federal Department of Health and Human Services. Several states are challenging provisions of health care reform on the basis of constitutionality. The Supreme Court is expected to rule on these challenges in 2012. In this environment, several states with low levels of support for the law are holding off on building exchanges and fulfilling other state requirements until the ruling is final.

If the law is upheld in its current form by the Supreme Court, states that have held off will have a matter of months to implement their own state-run exchange before the January 2013 deadline. The federal government is offering states grant money to support the development of their own exchanges. Virginia has until June 2012 to apply for federal funding. Although, that still only leaves six months for funding to be applied and operational build-out to be completed.

Del. Terry Kilgore, R-Scott County, the chairman of the House Commerce and Labor Committee, has filed a request for “placeholder” legislation that could be used as a vehicle for creating a state-run exchange. Kilgore is one of the legislators concerned about giving control over to a federally administered exchange.

Governor McDonnell had appointed an advisory council which spent close to a year developing recommendations for the exchange including what types of plans and pricing should be available based on Virginia’s current insurance market. These recommendations would be lost with a federally administered exchange.

The Virginia Department of Health and Human Resources has said that despite the work of the council, too many questions remained unanswered to move forward and not enough guidance is coming from health officials in the Obama administration. Virginia Health and Human Resources Secretary Bill Hazel chairs the Virginia Health Reform Initiative Advisory Council. Some have speculated that Governor McDonnell’s support for Hazel’s stance plays into the Governors future political ambitions.