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The ‘Year of Chaos’ for Health Insurance Exchanges

Are the Supreme Court’s deliberations derailing state efforts?

by / March 29, 2012

This week’s Supreme Court deliberations on President Obama’s Affordable Care Act (ACA) once again have passions running high over the U.S. health-care system. Speculation centers on the justices’ questions regarding individually mandated insurance coverage and whether they foretell a complete, or partial, reversal of the legislation. Many pundits now believe it’s probable the high court will strike down all or part of the legislation. Arguments before the Supreme Court concluded Wednesday, March 28, and a decision is expected before the court’s current session adjourns in June.

Passed by Congress on a partisan vote in March 2010, the act requires each state to have operational health insurance exchanges in place by January 2014. These websites would allow Americans to shop for health insurance plans that meet the ACA’s requirements.

The uncertainty about the ACA’s status has added another layer of complexity to the development of these websites, which already has been uneven state to state. “States are in a variety of different positions in terms of their planning for implementation of the Affordable Care Act,” said Glen Shor, executive director of the Massachusetts Health Connector, in an interview with Government Technology.

A Kaiser Family Foundation website tracks states’ progress in building their health insurance exchange. As of March 1, 2012, 14 states have established their systems, with many more in the study and planning stages. A recent Government Technology article details the efforts of many states as they march toward the 2014 deadline.

Some States Right on Target

States with their own exchanges up and running today appear to be well positioned to meet the federal timeline, despite what adjustments may be necessary as a result of the upcoming Supreme Court decision. Even if the original law is upheld, states would still have to integrate their systems with a federal system for verifying insurance eligibility. This federal system is not yet available.

“Those states that were moving forward with developing or deploying their own state-based exchanges — we're not seeing any particular pause in that momentum as a result of the court case,” said Jordan Battani, managing director of CSC’s global institute for emerging healthcare practices. CSC contracted with Massachusetts to design and build its health insurance exchange when the state enacted universal health coverage

Battani offered an explanation for the preparedness of those states at the forefront of health insurance exchange development: “That may be simply because the states that are moving forward on it are ones that have a relatively more active approach to regulating the insurance markets in their states,” she said.

But states adopting a more measured approach may have difficulty meeting the January 2014 implementation deadline if the ACA is deemed constitutional.

“Some states placed all of their chips on the Supreme Court throwing the whole thing out. If the Supreme Court goes their way, they're in a pretty good spot. But if it doesn't go their way, they'll be behind the curve from a development perspective,” said Dr. Norman Thurston, health reform implementation coordinator in the Utah Governor’s Office.

Current Efforts in Limbo?

Some forward-looking states are choosing not to be sidelined by uncertainty at the federal level. Utah, for example, is moving forward with its health insurance exchange for small business, expecting to use it regardless of the outcome of the ACA. “That's a little bit of a gamble, we know,” Thurston explained, “but we think that's a safer gamble that whatever we build will be at least useful as a platform post-Supreme Court [decision].”
Thurston suggested the energy that Utah officials are spending to monitor potential changes to the ACA has hampered other state-based health reform efforts. Utah would likely be further along in developing its health exchange for large businesses, he asserted, if not for the uncertainty at the federal level.

The November 2012 elections likely will have their own impact on health-care reform efforts, and therefore exchange implementations, Thurston said. “I’ve personally dubbed 2012 as the ‘year of chaos’ when it comes to these exchanges,” he added. “We have no idea what’s going to come out of it.”

Lloyd Lim, health branch administrator for the Hawaii Insurance Division, captured the fears of many organizations that are closely watching the current court deliberations.  “If [the Supreme Court] gets rid of ACA altogether, then we have a situation where there has been a tremendous amount of wasted effort and resources,” Lim said.   

Massachusetts Looks Forward Confidently

Massachusetts officials are health insurance exchange veterans, with a system dating back to 2006. Hopeful that ACA will be upheld, Shor is optimistic about the future of the state’s exchange.
“We're proceeding full steam ahead with our planning for implementing national health reform,” Shor told Government Technology. “We existed before the Affordable Care Act and we would continue to exist. And we would continue to be interested in becoming an even better health insurance exchange that's a better gateway to coverage.”


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Noelle Knell Editor

Government Technology editor Noelle Knell has more than 15 years of writing and editing experience, covering public projects, transportation, business and technology. A California native, she has worked in both state and local government, and is a graduate of the University of California, Davis, with majors in political science and American history. She can be reached via email and on Twitter.

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