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Health Care Reform and Affordable Health Insurance Exchanges

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What follows is an article describing the current state of the implementation of Affordable Health Care Exchanges, which were created by the Patient Protection and Affordable Care Act (PPACA) and signed into law in March 2010. As described below, the various states are in different places with respect to their implementation of the Exchanges; however, a number of lawsuits have been brought against the government regarding PPACA, challenging whether or not the law is constitutional. These arguments have made its way to the Supreme Court, and Assurance expects a decision from the Supreme Court later this month.

There are three realistic outcomes that the Supreme Court may come up with. First, they may leave the law as-is, affirming its constitutionality, in which case Exchanges will not be modified and work will progress as it is now. Second, the Court may declare one portion of the law known as the “Individual Mandate” as unconstitutional, but leave other portions of the law in place. This will have a marked effect on the way the Exchanges operate, but not necessarily their existence. Finally, the Court may rule the entire law as being unconstitutional, in which case those states still lacking Exchanges will most likely cease any work on them, and the Federal Government will not open Exchanges in those states that haven’t yet opened their own.

The information provided below is valid as of the time of publication, however we wanted you to be aware that this is a fluid situation. We will notify you as soon as we hear of any news from Washington regarding the Supreme Court decision and its implications.

Health Insurance Exchanges

The PPACA (also referred to as ACA) calls for the creation of state-based competitive marketplaces, known as Affordable Health Insurance Exchanges (Exchanges), for individuals and small businesses to purchase private health insurance. According to the Department of Health and Human Services (HHS), the Exchanges will allow for direct comparisons of private health insurance options on the basis of price, quality and other factors and will coordinate eligibility for premium tax credits and other affordability programs. ACA requires the Exchanges to become operational in 2014.

Due to a number of factors, states’ progress toward developing the Exchanges has been far from uniform, and many states are lagging behind with the planning and implementation process.

On March 27, 2012, HHS issued final regulations to provide a framework for states on important aspects of Exchanges. The final regulations provide states with flexibility in many areas to design Exchanges that work for their residents.

State Progress on Exchanges

According to HHS, since ACA was passed in March 2010, all states have taken some action to implement the health care reform law. For example, 49 states are participating in ACA’s premium rate review system where insurers must justify the rationale behind any double-digit increases in insurance premiums. However, states have not made nearly as much progress toward establishing their Exchanges.

Exchanges must be ready to accept enrollees on October 1, 2013. To meet this deadline, a state’s plan to operate an Exchange must be approved by HHS no later than January 1, 2013. HHS will give conditional approval for a state’s plan if the state is advanced in its preparation but cannot demonstrate complete readiness by Jan. 1, 2013. If a state fails to meet this deadline, HHS will operate an exchange for residents of that state.

Some states, including California, Oregon, Vermont and West Virginia, plus the District of Columbia, have already established Exchanges and are working on additional implementation issues, such as information technology systems. Other states are taking steps to implement their Exchanges or are studying options for creating Exchanges, such as Illinois, Mississippi, Virginia, Arizona, Iowa and Minnesota. Louisiana and Arkansas have announced that they do not intend to create their own Exchanges, but will partner with HHS to develop an Exchange or will let HHS establish an Exchange for their residents.

More information on the Exchanges is available through The Center for Consumer Information & Insurance Oversight.