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Leader's Edge Stormy Affair

The states and the federal government are at odds over health insurance exchanges. Some are trying to bury the hatchet while others conjure conspiracy theories.

By  Scott Sinder and John Fielding

Despite the usual tense relationship between the two organizations, the National Conference of Insurance Legislators (NCOIL) and the National Association of Insurance Commissioners (NAIC) appear to be coalescing around a common enemy: the federal government.

Both groups recently held their spring meetings on the Gulf Coast and discussed the enactment of the Patient Protection & Affordable Care Act and the status of new Federal Insurance Office.

They focused on Obamacare’s new state insurance exchanges. Teresa Miller, former top regulator in Oregon and now with the Center for Consumer Information and Insurance Oversight at the Department of Health and Human Services, serves as a senior advisor on state exchanges. She told both NCOIL and the NAIC that the department would soon issue guidance to assist the states in developing their exchanges. A week later, it did.

The department is promising guidance “soon” on satisfying essential health benefit standards, exchange-Medicaid eligibility issues, tax credits for the exchanges, and how exchanges will operate in states that do not create their own.

Miller emphasized the federal government’s desire to work with states that need help developing their exchanges. Few states will have made “certifiable” progress on their exchanges by 2013, as required by the law. While many states are dragging their feet while they await the Supreme Court’s ruling on the law’s constitutionality, they also desperately want to maintain the state-based nature of the exchanges. So the Department of Health and Human Services is talking a great deal about flexibility and working with individual states throughout the development process.

Miller made clear that the January 1, 2013, deadline to certify a state’s exchange progress is not a drop-dead date. The government will continue after that date to help non-certified states create their own exchanges or work within the federally facilitated exchange in their states. This could be a sizable number of states. The government estimates that more than half the states are well on their way to establishing exchanges, which, of course, leaves as many as two dozen that are not.

The states lagging behind essentially fall into three categories:

· Those that wish to develop exchanges but have not done so

· Those that want nothing to do with exchanges and intend to allow the federally facilitated exchange to operate in their states

· Those states that fall somewhere in the middle, waiting to see how things play out.

It’s not surprising that many states are not acting, given the vitriolic political culture this election year. For their part, state regulators and legislators consistently pressed Miller for more information. Their frustrations were palpable and predictable. State legislators focused on politics, missing no opportunity to bash or defend, depending on their partisan leanings, the healthcare reform law and the Department of Health and Human Services.

Regulators, on the other hand, generally avoided politics, focusing instead on technical and enactment issues. To their credit, they focused on how best to work for consumers. Their focus on policy over politics was brought into sharp relief when one of the state commissioners offered a resolution to protect “religious freedom” in insurance (in response to the contraception coverage brouhaha). The resolution was not even debated by the NAIC membership (consideration failed for lack of a second). Imagine that happening among state legislators.

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