Most States Won’t Create Exchanges

Yesterday was the deadline for states to tell the Department of Health and Human Services whether they wanted create their own health insurance exchanges. As the NYT reports, only 17 states have said they intend to create an exchange. Among the reasons states have given for refusing to cooperate is the lack of guidance from HHS and the reality that state exchanges will still have to play the federal government’s tune.

Pennsylvania seriously considered running its own exchange, but Gov. Tom Corbett said on Wednesday that he would not pursue the idea.

“State authority to run a health insurance exchange is illusory,” Mr. Corbett said. “In reality, Pennsylvania would end up shouldering all of the costs by 2015, but have no authority to govern the program.”

In Tennessee, state officials did a huge amount of planning for a state-run exchange. But Gov. Bill Haslam announced this week that he had decided against the idea because the Obama administration had failed to answer numerous operational questions.

Gov. Chris Christie of New Jersey cited similar concerns in vetoing legislation to establish a state-based exchange last week.

“New guidance continues to trickle out of Washington at an erratic pace,” Mr. Christie said.

The federal government faces a daunting challenge in trying to create exchanges in 30 or more states. Among the other problems, the PPACA did not provide HHS with any money to pay for the creation or operation of federal exchanges. Last year, HHS conceded this would require getting “creative.” One step HHS intends to take is imposing a 3.5 percent surcharge on the sale of insurance plans in federally run exchanges, but this still won’t be enough.