Bloomberg News

First Six State Health Insurance Markets Approved by U.S.

December 11, 2012

Obama Approves First Six U.S. State Health-Insurance Exchanges#

“The majority of states will play an active role operating their exchanges,” Kathleen Sebelius, the U.S. health secretary, said in a blog post. Photographer: Brendan Smialowski/Bloomberg

Six U.S. states became the first to meet Affordable Care Act rules for the creation of marketplaces by 2014 where local residents can buy medical insurance.

Colorado, Connecticut, Massachusetts, Maryland, Oregon and Washington, all states with Democratic governors, have made enough progress building their health-insurance exchanges to receive conditional approval to begin enrolling members in October 2013, the U.S. Department of Health and Human Services said yesterday in a statement. The six represent less than half of the 14 states that have told the U.S. they will set up the online exchanges.

A majority of states, most led by Republican governors, may allow the U.S. to run the markets or choose to provide services such as consumer assistance in a partnership with the federal government. Twenty-two governors have already sent notice that they won’t build their own exchanges. The remaining states have until Dec. 14 to decide.

“The majority of states will play an active role operating their exchanges,” Kathleen Sebelius, the U.S. health secretary, said in a blog post.

The 2010 health law is expected to extend coverage to about 30 million Americans who would otherwise lack insurance starting in 2014. Congressional budget projections show that more than half of those people would buy subsidized plans through the exchanges and 11 million would become eligible for Medicaid, the state-run insurance program for the poor.

Medicaid Support

The Medicaid portion of the law is dependent on state cooperation after the Supreme Court ruled June 28 that governors can opt out of the expansion. Some governors asked Sebelius if they could expand Medicaid by less than what President Barack Obama wants while still taking advantage of a 90 percent federal reimbursement for the program’s costs.

The Obama administration responded yesterday, saying states won’t get full federal support for expansions of Medicaid that fall short of the level directed by the health law. Medicaid is the joint U.S.-state medical program for the poor.

“The Obama administration’s refusal to grant states more flexibility on Medicaid is as disheartening as it is short- sighted,” Louisiana Governor Bobby Jindal, the chairman of the Republican Governors Association, said in a statement. “The current Medicaid system is broken, and it is an inefficient mechanism for expanding coverage.”

The law calls for Medicaid to expand to cover everyone making as much as 138 percent of the poverty level, or about $31,809 for a family of four this year. The U.S. will pick up the full cost of the expansion until 2017, when federal reimbursement begins to decline to 90 percent of the cost.

If the U.S. approves smaller expansions, states will be reimbursed at the usual federal match rate, which varies from 50 percent to 74 percent this year, depending on the state.

“The enhanced match rate is a rate Congress reserved for the full expansion,” said Cindy Mann, the U.S. Medicaid director, in a conference call with reporters. “We are going to remain true to that intent of Congress.”

To contact the reporter on this story: Alex Wayne in Washington at awayne3@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net


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