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Wait-and-See Approach to Health Exchanges May Haunt States

A central component of the Affordable Care Act (ACA) is the creation in each state of a health insurance “exchange” — a competitive marketplace in which individuals and small businesses can choose among an array of affordable, comprehensive private insurance plans.  In states that don’t develop an exchange, the federal government will do it for them.

As the New York Times noted recently, state-level exchange implementation has stalled in some states with Republican governors and/or legislatures that remain opposed to the health reform law.  CBPP estimates that at least a dozen states (see map) are taking a wait-and-see approach as to whether or not they will establish an exchange, citing uncertainty until the Supreme Court rules on the ACA’s constitutionality this summer.  Yet many policymakers in these states have also said that if the Supreme Court deems health reform constitutional, they would much rather have a state-run exchange than a federal one.


However, delaying a decision on whether to establish a state exchange until the summer could effectively be a decision to let the federal government set up the exchange.

The federal government will have to determine by January 2013 that each state will have its exchange up and running on time; as part of that process, states will likely have to submit plans for their exchanges later this year.  Then states will have to test their eligibility, enrollment, and management systems in the spring and summer of next year, commence an open-enrollment period for consumers to shop for coverage starting in October 2013, and go live with exchange coverage on January 1, 2014.

It’s hard to imagine how a state could take all the necessary legislative, policy, operational, and IT system development steps needed to meet this compressed timeline if it doesn’t start work until the summer.

A number of other states have forged ahead with development of their exchanges, and it’s fortunate that the ACA ensures that residents of all states will have access to affordable, decent-quality coverage options through an exchange, whether or not their state establishes one.  But it would be unfortunate if some states lose the ability to set up their own exchange when their leaders decide to “wait and see.”

Note: map was updated March 1, 2012 to include Alaska