November 3, 2011 / 7:06 PM / 8 years ago

Insurance exchanges could harm US states' autonomy

WASHINGTON, Nov 3 (Reuters) - Some of the federal healthcare law’s requirements related to insurance exchanges threaten the autonomy of U.S. states, which need more support in establishing the marketplaces, state governors said in a letter released on Thursday.

“The decision to implement health insurance exchanges requires a number of complex policy decisions amid aggressive timelines,” wrote the National Governors Association in a letter to U.S. Health Secretary Kathleen Sebelius dated Nov. 2.

“States can only make suitable decisions if provided with complete and timely information regarding the structure of a state-federal partnership, essential health benefits and the design of a federal exchange,” it added.

Iowa Governor Terry Branstad, a Republican, and Illinois Governor Pat Quinn, a Democrat, signed the letter, representing the association’s health committee.

Exchanges where individuals can purchase health insurance are key to the healthcare reform plan championed by President Barack Obama. States can create exchanges alone, band with neighboring states or opt out entirely and have the federal government establish exchanges within their borders.

“States would be required to cede many operations that have been traditionally handled at the state level, such as Medicaid eligibility,” the governors wrote about all three exchange versions.

“States have invested taxpayer resources in state-based eligibility systems since the Medicaid program began and want to avoid duplication of effort,” the letter added.

Medicaid is the health insurance program for the poor that states operate with reimbursements from the federal government. They will need to determine if people seeking to buy insurance in the exchanges are actually entitled to enroll in Medicaid.

The federal government also would not send funding to states for establishing new exchange functions after 2012, which could lock them “into an all-or-nothing approach.”

That could hamper development of exchanges because currently “many states are undecided on implementation strategies because of various uncertainties, including the lack of final rules and regulations,” the governors wrote.

The law, signed in 2010, gives states great latitude in establishing exchanges, which has left many scrambling to build computer systems, hire staff and design exchanges from scratch.

In the letter, the governors asked the federal government to take over areas where they do not have current operations, such as facilitating advance payment of premium tax credits to insurers. They also sought help in certifying technology and software, such as a benefits calculator, that states could build upon for their exchange systems.

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