CMS Approves 3 More Health Exchanges; Many States Opt Out

The extended deadline for states to notify CMS of their intent to run the health insurance exchanges established under the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) expired on Friday, December 14, 2012, with many states choosing not to participate in exchanges at all. The same day, CMS conditionally approved three more proposals to operate exchanges, from New York, Kentucky, and the District of Columbia. Proposals from six states, Colorado, Connecticut, Massachusetts, Maryland, Oregon, and Washington, were approved on Monday, December 10, 2012. It appears that 17 states and the District of Columbia will operate their own exchanges.

 Many states notified CMS that they would not run an exchange; these states had Republican governors who opposed PPACA. Utah, which established an exchange before PPACA was enacted, will retain its own exchange rather than redesign it to meet PPACA standards. Virginia chose not to submit a blueprint for a state-run exchange. However, Idaho’s Republican governor, C.L. Otter, announced that it will establish an exchange, and Minnesota submitted its blueprint before the deadline expired. By January 1, 2013, CMS must determine whether the states will be ready to operate their exchanges when enrollment begins.

 There has been speculation that states may derail PPACA by refusing to participate. However, state officials also cited insufficient guidance from the federal government as the reason they would not participate.

 It is still possible that more states will cooperate with the federal government in running a “partnership” exchange, in which they share responsibility. The states must submit their proposals for partnership exchanges by February 15, 2013.

 Health insurance exchanges are electronic marketplaces where consumers can learn about and compare the health plans that meet federal requirements for minimum coverage. Consumers will be guaranteed acceptance into these plans, and premiums will be regulated. They are a key component of PPACA, together with the Medicaid expansion, the individual and employer mandates, and the tax credit for premium payments.