Clock ticks down on a state-run health insurance exchange

The Joint Committee on the Federal Health Care Law has hosted regular meetings this fall to take stock of Oklahoma’s options and responsibilities as new provisions of the Affordable Care Act (ACA) take effect.  The first meeting explored the impact of health reform on public programs; the second heard testimony about the new law from private business and industry representatives.  The third meeting, held last week in Oklahoma City, got down to brass tacks by beginning to address a major policy piece for states:  planning and implementing health insurance exchanges. OK Policy staff was invited to offer our assessment and we concluded that the window for Oklahoma to operate its own exchange – versus having the federal government do so – may have already closed.

Exchanges are online health insurance marketplaces for individuals and small businesses (we’ve covered the basics of health insurance exchanges in previous posts).  States have some flexibility in setting up their exchanges, but all exchanges must meet certain minimum requirements.  If Oklahoma wants to run its own exchange, we need the stamp of approval from the federal government that our exchange plan is in good order by January 2013. In states that are not on track to have a state-run exchange operational by January 1, 2014, the federal government will step in and operate a federally-facilitated exchange.

In just fourteen short months, Oklahoma needs to be able to demonstrate to the federal government that we are equipped to operate a highly sophistical web portal where private insurance will be sold with robust consumer protections.  The portal must determine consumers’ eligibility for new premium subsidies, and it must allow low-income Oklahomans to enroll in public health insurance programs like Medicaid. The state must be ready to regulate insurance companies operating on the exchange, provide extensive consumer assistance, and guarantee strong financial oversight.

Oklahoma has made every indication that we do not intend to move forward to implement an ACA-compliant insurance exchange.  We’ve returned $54M to the federal government intended to cover the costs of exchange IT components.  We’ve returned $1M intended to assist the Oklahoma Insurance Department with making necessary regulatory changes that pave the way for insurance exchanges.  The public planning process has come to a dead halt, and health care stakeholders have not held a planning meeting in months.  Oklahoma has made progress in only one out of eleven core areas outlined by HHS as critical to exchange-readiness. Right now, the state lacks the dedicated resources, leadership authority, common purpose, or political will needed to move ahead.

The Joint Committee on the Federal Health Care Law is focused on understanding what our options are and whether Oklahoma is better off with a state or federal exchange. The Committee’s leadership, as well as many in the business community, have made clear that they would like to see Oklahoma operate a more loosely-regulated exchange, one closer to the model Utah has developed. It is hard to know how much flexibility the federal government would allow Oklahoma in developing its exchange, as federal guidance is still evolving. There may be opportunities for partnerships where the federal government and Oklahoma divide responsibilities for various core exchange functions. But without swift and serious action, Oklahoma will be left watching federal implementation of our exchange from the sidelines.