GOP Governors Stall Health Insurance Exchange Plans

By: - March 1, 2012 12:00 am

It’s hard to find a governor who doesn’t agree that creating an organized marketplace to help consumers and small businesses shop for health insurance is a good idea. But when it comes to implementing the state-run exchanges called for in the controversial 2010 federal health law, many GOP governors are balking.

If they opt out of building their own exchanges, they would have to hand over control of the project to the federal government — something no governor wants to do. So instead of taking a hard line on the issue, a handful of governors have recently carved out a middle ground.  They’re putting off a decision until June when the U.S. Supreme Court is expected to decide whether the health law is constitutional.

Nebraska Governor Dave Heineman, a Republican, is a good example. In his January state of the state speech he declared: “Because it is the current law, our state is moving forward with the planning and designing of a state health insurance exchange.” But more recently, he changed his tune. Instead of moving forward, he said he had decided to wait, according to a report by Nebraska Radio Network.

Waiting with Nebraska are Alabama, Florida, Georgia, Indiana, Kansas, Missouri, Michigan, South Dakota, Texas, Virginia and Wisconsin, according to news reports compiled by the Center for Budget and Policy Priorities.

The big question is whether states that wait for the high court’s decision will be able to build an online insurance marketplace in time to meet federal deadlines. “It’s hard to tell,” says Joy Johnson Wilson, health policy director for the National Conference of State Legislatures. “There’s a lot going on behind the scenes.”

Wilson and others report that even in states where governors are holding off, a lot of work already has been done using federal grant money. Every state has received a $1 million planning grant, and 34 states and the District of Columbia have received a total of more than $600 million from the U.S. Department of Health and Human Services to build the state exchanges.

The goal of the exchanges is to help individuals and small businesses shop for comparable coverage. They’re also intended to make it easier for low-income people to apply for Medicaid and help business owners and moderate-income individuals apply for federal tax credits. States must have simplified insurance offerings and a standardized application form — plus a consumer-friendly online presentation — ready to pass muster with federal regulators by January 1, 2013. If they don’t, the federal government may decide to step in.

But the U.S. Department of Health and Human Services has recently proposed a couple of other options. Although details are not yet available, the agency has said states can partner with the federal government to build an exchange or take over a federally-run exchange in 2015. In both cases, federal money would be available for states.

Of the dozen states that are postponing a decision, five — Florida, Georgia, Kansas, South Dakota and Texas — also have failed to apply for federal money to build an exchange. Louisiana and Arkansas have officially opted out of building their own exchange and other states have yet to take action. At least 11 states and the District of Columbia have fully embraced health insurance exchanges with laws or by executive order: California, Colorado, Connecticut, Hawaii, Maryland, Nevada, Oregon, Rhode Island, Vermont, Washington and West Virginia.

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Christine Vestal

Christine Vestal covers mental health and drug addiction for Stateline. Previously, she covered health care for McGraw-Hill and the Financial Times.