Time for states to decide on health care exchanges

December 13, 2012 RSS Feed Print

The health care law increased the power of the federal government, but states that run their own exchanges retain important roles overseeing insurance plans, addressing consumer issues and coordinating between the new marketplace and their Medicaid plans. That last item may be the most important, since Medicaid is a major component of state budgets.

Critics of the law believe the Obama administration will be overwhelmed trying to set up so many exchanges in states that are hostile to the idea. Some say the president may have to accept delays, perhaps in the face-saving context of budget negotiations where a delay would count as savings. Publicly, administration officials are adamant that won't happen, and independent observers are starting to believe them.

"It would be politically unwise for the president to delay the start of these benefits," said Dan Mendelson, president of Avalere Health, a market analysis firm. "If this is going to be a legacy item, he's got to move forward."

The key to that will be something called the federal exchange, the fallback, which is on a tight development schedule overseen by Health and Human Services Secretary Kathleen Sebelius.

The government has awarded two big technology contracts for exchanges. Virginia-based CGI Federal Inc. is building the federal exchange. Maryland-based Quality Software Services Inc. is building what's called the federal data services hub, an electronic back office that will be used by the federal exchange and state exchanges to verify identity, income, citizenship and legal residence.

Estimated price tag for the federal exchange: at least $860 million.

"We are all keenly aware that open enrollment is coming quickly," said Gary Cohen, who heads the HHS office overseeing the rollout. "And we will be ready to open our doors."

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Associated Press writer John Miller in Boise, Idaho, contributed to this report.