States must decide today on healthcare exchanges

At least 19 states have opted out of creating their own state-run insurance exchanges ahead of today’s deadline, causing yet another complication for President Barack Obama’s healthcare reforms.

The Affordable Care Act counted on the insurance exchanges—online marketplaces for people to shop for private health insurance at federally subsidized rates—and an expansion of Medicaid to cover uninsured Americans. But in June, the Supreme Court ruled that the U.S. Department of Health and Human Services (HHS) could not force states to expand Medicaid.

Now only 17 states, and Washington, D.C., say they plan to operate their own exchanges. The others will opt for the federal government to take either complete control or much of the reins of the project, creating a daunting task for the Obama administration. The exchanges are supposed to come online in less than a year, but most analysts expect delays.

Some states intend to partner with the federal government to set up exchanges. As of Friday morning, six states have not decided what they plan to do.

On Wednesday, Pennsylvania Gov. Tom Corbett, a Republican, became the latest to join the group of governors opting out of creating a state-run exchange. Many have complained the HHS continues to add new regulations to the exchange program.

"Healthcare reform is too important to be achieved through haphazard planning. Pennsylvania taxpayers and businesses deserve … informed decision making and a strong plan that responsibly uses taxpayer dollars," Corbett said in a statement. "It would be irresponsible to put Pennsylvanians on the hook for an unknown amount of money to operate a system under rules that have not been fully written."

Proponents of the healthcare law point to federal grants to fund state exchanges, but these grants run out by 2015 and states must then develop their own revenue sources.

A Maryland panel this week projected that the annual administrative costs for the state’s exchange would be $201 per enrollee in 2015, declining to $152 in 2017, paid for by taxpayers. But under the federal exchange, administrative costs would total only $97 per enrollee, according to Heritage Foundation’s Nina Owcharenko and Ed Haislmaier.

While some Republican governors—including the governors of Idaho, Iowa, Nevada, and New Mexico—have decided to create their own exchanges in order to control the healthcare law’s impact on their states, Owcharenko and Haislmaier said HHS regulations “allow states no meaningful flexibility or advantage by operation their own exchange, relative to a federal exchange. Those states would simply be acting as vendors to the HHS.”

The federal government also wanted states to expand Medicaid to adults earning 133 percent of the poverty rate, about $15,000 for individuals and $30,600 for a family for four. But the Supreme Court ruling said that states can opt out of that as well.

Some states asked if they could expand Medicaid outside of the HHS requirement and still receive a 90 percent reimbursement from the federal government, but the HHS declined.

“The Obama administration’s refusal to grant states more flexibility on Medicaid is as disheartening as it is short- sighted,” said Louisiana Gov. Bobby Jindal, chairman of the Republican Governors Association. “The current Medicaid system is broken, and it is an inefficient mechanism for expanding coverage.”