With the U.S. Department of Health and Human Services expected to release new guidance to states for establishing health insurance exchanges, both states and insurance carriers are moving forward gingerly with plans for 2014 when the exchanges are set to go live.
But the unfortunate reality is, only two-and-a-half years before they are required to go live, there are still as many questions surrounding the state exchanges as there are answers.
A map showing the progress each state has made on its exchange is telling: Only six states have signed laws to create an exchange; another six have legislation that has passed at least one chamber in the state; seven states have legislation pending; and five states have governors that are considering non-legislative approaches. The remaining 24 states are essentially no closer to setting up an exchange than they were before the passage of health reform.
Yet even those that are pushing ahead face a considerable challenge.
"I think under any scenario it is a very tight framework. It is only eight quarters away," said Dhan Shapurji, director with Deloitte Consulting LLP. "If you think about the open enrollment period, it needs to be there by the last quarter of 2013. You need to do testing of it three to six months before that and then you need several months to set it up."
That said, HHS does have a pot of money it can deploy to states to speed along their development work, both for establishment grants and perhaps more importantly, IT Innovator grants that it has provided to seven states to the tune of $241 million.
[See also: HHS alots $241M for state insurance exchange IT; Payers can address operation challenges of health insurance exchanges now]
"Part of our thinking for (the IT Innovator grants) is that states can learn from one another," said Chaquita Brooks-LaSure, director of coverage policy, with the HHS Office of Health Reform. "The goal of these IT Innovator grants is to develop cutting edge and cost-effective exchange information technology systems models and those can be adapted and tailored by other states to establish eligibility for tax credits and enrollment purposes."
The upcoming HHS guidance should help states have a clearer idea of how to move forward. It is also likely states will look to either Massachusetts or Utah, the two states with exchanges that pre-date health reform, or even to California – which was the first state to have a law on the books to establish the insurance exchange after the passage of PPACA – as models for how to set up their own state systems.
"One of the good things California has done is to move very quickly and even in California the set of tasks that stretch out before us is very daunting," said Micah Weinberg, senior research fellow in health policy, New America Foundation in a recent Commonwealth Fund webinar. "One of the things that California has done that other states will want to do is to focus on the exchange as a portal to coverage not only for folks purchasing private insurance but for public programs as well."
While each state's progress and exchange format will be different, payers in the market can begin to prepare for 2014 with the understanding that the exchanges themselves will likely serve as a middle ground for people on state Medicaid and individuals who are subsidized to buy insurance on the exchanges. And that is one area insurance companies can begin planning for now.
"We believe there will be some migration of people coming into Medicaid and then coming out and then those going into a subsidy program and falling back into Medicaid," Shapurji said. "Many health plans are looking at what the offerings are right now in Medicaid and many health plans that left Medicaid a few years back are thinking about entering Medicaid again because of this very issue."
Kim Belshe, who sits on the California Health Benefit Exchange Board, understands that this is a role her state's exchange must embrace.
"We are, in some respects, the little sister of Medicaid," she said "We understand that we will only be successful if we are able to integrate and collaborate with Medicaid. So that has been an important near term internal focus and with a priority placed on exchange-Medicaid IT integration."