More states cleared to operate health insurance exchanges

WASHINGTON — The Obama administration has cleared what could be the final group of states to open their own health insurance exchanges this fall, advancing a key goal of the 2010 healthcare law to provide Americans with new options to shop for coverage.

The conditional approvals announced for California, Hawaii, Idaho, Nevada, New Mexico, Vermont and Utah mean 17 states and the District of Columbia are on track to operate their own insurance exchanges this year.


Exchanges in the remaining states will be run by the federal government or by state-federal partnerships.

“It’s encouraging to see so many states moving forward,” Secretary of Health and Human Services Kathleen Sebelius said. “Finding the right health plan is going to be less costly and less complicated than ever before.”

Administration officials and many healthcare experts hoped each state would operate an exchange, a cornerstone of the Affordable Care Act designed to allow consumers who don’t get health benefits at work to comparison shop for health plans, much as they now buy airplane tickets.

Health plans in these exchanges will have to meet new minimum standards and guarantee coverage, even to those with preexisting medical conditions. Consumers who make less than four times the federal poverty level will be eligible for new government subsidies to offset their premiums.

Most states led by Democratic governors chose to set up an exchange. Colorado, Connecticut, Kentucky, Massachusetts, Maryland, Minnesota, New York, Oregon, Rhode Island, Washington, and the District of Columbia had already received preliminary clearance from the administration.

Delaware and Arkansas, which have Democratic governors, have received conditional approval to run a partnership exchange. Several other states, including Illinois, Iowa and North Carolina, have expressed interest in such an arrangement.

But most Republican state leaders, many of whom have vigorously fought implementation of the 2010 law, balked at setting up an insurance marketplace, with many complaining that it would saddle states with additional costs. States that defer to the federal government can reconsider in the future.

For now, only four GOP-led states — Idaho, Nevada, New Mexico and Utah — are moving ahead with their own exchanges.

Many healthcare experts have been closely watching Utah, which has been operating a limited exchange for small businesses for years.

Obama administration officials indicated that the state would have to considerably expand services to comply with the law, including adding resources to help consumers shop for health plans and developing a system to fund the exchange. If Utah does not meet these conditions, the administration could step in and run the state’s exchange.

The administration also is in discussions with state officials in Mississippi, who earlier indicated they wanted to run their own exchange.

Gary Cohen, who oversees the Obama administration’s exchange effort, said it was now unclear whether the state would move forward because of a dispute between the state’s Republican governor, who does not want to run an exchange, and the state’s Republican insurance commissioner, who does.

Cohen did not say when a final decision would be made on whether Mississippi would run its own marketplace.