State Legislators Tussle Over Health Benefit Exchanges as Adjournments Near

As state legislatures near the end of their sessions, many lawmakers are still struggling with whether to approve measures to set up health-benefits exchanges created under the health care law – and it appears almost certain work in many states will extend into 2012.
While a few states have enacted legislation and others may be nearing final action, many others are torn by differing opinions among politicians, health care providers and consumers about what an exchange should look like or how it should function.
“I think they are finding it difficult to reach consensus,” said Joy Johnson Wilson, health policy director for the National Conference of State Legislatures. “Certainly people here underestimated how hard it would be. I always thought it would be a two-session thing.”
Fewer than half of the states will have enabling legislation in place at the end of this year’s legislative sessions, Wilson predicted. The rest likely will continue working through interim committees ahead of their 2012 sessions.
Meanwhile, the National Association of Insurance Commissioners continues work on draft white papers tackling difficult issues surrounding exchanges, such as governance and the health care navigators, which are are entities that conduct public education activities.
An NAIC subgroup on exchanges is scheduled to have a conference call Thursday to discuss the status of several exchange-oriented white papers, which are expected to be used by states as models for legislation. The health care law also calls on the Department of Health and Human Services to consult with NAIC, among other entities, as its own policies on exchanges are developed. A proposed HHS rule on exchanges and other elements key to setting up the new marketplaces is eagerly awaited by state officials. HHS officials have said it would be out this spring.
While some of the tension on the state level is due to Republican dislike of the health care law, Wilson said the disputes really are particular to each state and have to do with their distinct cultures and histories. Sometimes it’s a disagreement over what committee will get to handle the exchange bill or who will sit on the boards overseeing the exchanges.
In some cash-strapped states also preoccupied with redistricting, the exchanges may not be much of a priority right now.
The launch of exchanges is required under the law (PL 111-148, PL 111-152) by Jan. 1, 2014, though Wilson said she has doubts whether that deadline can be met. States are supposed to have their exchanges in place by 2012 or the federal government is required to step in and establish exchanges for them.
Some of the problems are illustrated by a stalled bill in North Carolina. House Republicans have been pushing a bill creating a Health Benefits Exchange Authority but it got snagged amidst objections from both consumer groups and advocates of limited government, the News & Observer of Raleigh reported Wednesday.
It’s uncertain whether the state Senate will take up the legislation. If it does not, the General Assembly will have just six weeks in a short session in 2012 to enact the bill and apply for a federal grant by June 30, 2012, the newspaper said.
On the other hand, Colorado lawmakers earlier this month approved and sent to Gov.John W. Hickenlooper legislation that would establish a framework for an exchange overseen by a nine-member board there. Hickenlooper is expected to sign the bill any day.
Wilson said Hawaii Gov. Neil Abercrombie is expected to soon sign an exchange bill there. It’s still possible that Rhode Island, Connecticut, Illinois and Missouri will act this year, she said.
California was first, with its exchange bill signed into law in 2010. And Wilson said Louisiana is the only state that she knows of that has notified HHS that it won’t be creating its own exchange. Others may well be unable to produce a state-governed exchange but that’s not yet clear.
Plenty of attention is focused on the states. The Blue Cross Blue Shield Association issued an analysis this week saying that states should implement competitive exchange models that maximize both choice and competition for consumers. The insurer recommended that states move forward to establish their own exchanges rather than the federal fallback.
“If the federal government does step in to implement an exchange in a state, it will creative duplicative and conflicting regulatory functions that will confuse consumers,” said the health insurer. “For example, who would oversee appeals and grievance processes?”
The association also recommended that all qualified health plans meeting federal health law standards should be available on an exchange, rather than states picking and choosing among plans, and that premiums continue to be regulated by state insurance commissioners.
Jane Norman can be reached at jnorman@cq.com