IB-2011-A (March 2011)
Author: Linda Gorman
The federal Patient Protection and Affordable Care Act of 2010 (ObamaCare) encourages each state to set up an American Health Benefits Exchange. States received $1 million federal grants to work on exchange development. The exchanges will broker individual and small group plans offered by insurers and health benefit plans. They do not buy or develop health insurance and must be self-supporting by January 1, 2015.
The law says that exchanges may become self-supporting by charging “assessments or user fees to participating health insurance issuers, or to otherwise generate funding, to support its operations.” The model, and the only operating exchange of any significant size, is the Massachusetts Connector Authority, which cost $30 million to operate in 2009.
By January 1, 2013, the Secretary of Health and Human Services must determine whether a state will have an operational exchange by January 1, 2014. If a state exchange will not be operational, the federal government will operate its own exchange in that state either directly or through agreement with a not-forprofit entity. Federal law specifically says that the operation of a federal exchange has no effect on state regulatory authority or law.
A state’s ability to tailor exchange products to its needs is limited. State exchanges must comply with detailed federal regulations. Only qualified health plans, as defined by the new law, may be offered, and exchanges must meet specific reporting, structural, and contracting requirements, produce required ratings, and provide internet and telephone access. The Secretary of Health and Human Services has yet to issue either regulations giving specific standards for state exchanges or a model to provide guidance.
Several governors have determined that their citizens will be better off without a