Applications to Operate State-Based Health Insurance Exchanges Increase

December 21, 2012

Health and Human Services (HHS) Secretary Kathleen Sibelius on Dec. 17 announced that 10 states have filed applications to create state-based insurance exchanges (SBEs). A number of states met the Dec. 10 deadline and submitted “Blue Print” applications for SBE status approval. The states are California, Hawaii, Idaho, Minnesota, Mississippi, Nevada, New Mexico, Rhode Island, Vermont and Utah. States can also choose to enter into a partnership with the federal government in which the states conduct plan management and/or assistance functions. The deadline for states to apply to be a state partnership exchange (SPE) is Feb. 15, 2013.

The HHS gave conditional approval to eight states and the District of Columbia to operate their own state health insurance exchanges (SBEs) under the healthcare reform law. These states are Colorado, Connecticut, Kentucky, Massachusetts, Maryland, New York, Oregon, Washington and the District of Columbia. HHS found that these states had made enough progress in setting up their own exchanges for individual and small group plans that they are likely to be ready to take applications when open enrollment begins on Oct. 1, 2013. Plans sold in the online markets will take effect in 2014.

Under the Affordable Care Act, HHS will operate federally facilitated exchanges (FFEs) in states that do not set up their own SBEs or enter into state partnership exchanges (SPEs). States have received funds from the federal government for planning and establishment grant awards to develop information technology systems and for other tasks to create health insurance exchanges. The Centers for Medicare and Medicaid Services have indicated that $2.1 billion in exchange grants have been awarded to the states.

For those keeping score, the healthcare community firm Avalere Health LLC estimates that 12 states would likely form SPEs, another 20 would likely be FFEs and 18 would operate their own health insurance exchange SBEs. Twenty-five states have indicated that they will not have state-operated exchanges. They include Maine, New Hampshire, Pennsylvania, New Jersey, Virginia, South Carolina, Georgia, Florida, Alabama, Tennessee, Ohio, Indiana, Wisconsin, Missouri, Louisiana, Texas, Oklahoma, Kansas, Nebraska, South Dakota, North Dakota, Montana, Wyoming, Arizona and Alaska.

For a further discussion of state insurance exchanges under the ACA, see Nonprofit Health: What Does the Future Hold? McGuireWoods white paper, Aug. 4, 2011.

McGuireWoods Nonprofit & Tax-Exempt Organizations Group

Our nonprofit and tax-exempt organizations lawyers provide advice and guidance that enable charities and other nonprofits to operate efficiently and effectively in today’s increasingly complicated, regulated and competitive environment.

McGuireWoods LLP Healthcare Group

McGuireWoods offers an experienced team of more than 50 lawyers well-versed in serving the needs of the healthcare, pharmaceutical, life sciences and medical device sectors. We understand the daunting array of legal and business issues our clients face, and we work tirelessly to find effective solutions to their daily challenges.