Obamacare and Your State Health Insurance Exchange


English: U.S. Health Insurance Status (Under 65)

English: U.S. Health Insurance Status (Under 65) (Photo credit: Wikipedia)

The face of health care and, for those who have it, health insurance, is changing, and will continue to do so as 2013 is upon us. So a word of advice, enjoy stuffing yourself over the Thanksgiving and Christmas holidays as you spend time with your family and friends.


Establishment of a State Health Insurance Exchange.

According to Healthcare.gov, a web site managed by the U.S. Department of Health & Human Services, (HHS), “An Exchange is a mechanism for organizing the health insurance marketplace to help consumers and small businesses shop for coverage in a way that permits easy comparison of available plan options based on price, benefits and services, and quality. By pooling people together, reducing transaction costs, and increasing transparency, Exchanges create more efficient and competitive markets for individuals and small employers.”

The site goes on to say, “Establishment of an Exchange is a critical step that States must take to be on track for achieving certification of an Exchange by January 1, 2013 under Section 1321.”

It is critical to understand that all of the 50 states are under no obligation to create a Health Insurance Exchange for their state and its residents. The requirement created by the 111th Congress and designated as H.R. 3590 is therefore completely federal law with no states oversight. The federal government having created the requirement is shirking their responsibility for creation and funding of the requirement by giving the states the option of creating the state exchange. So far no one seems to think that the federal government passing the bureaucratic and financial burden of the mandate onto the states is in the least bit dodgy.

The Rush to Create an Exchange.

There is no such rush, and any information that the state exchange needs to be created quickly is complete fantasy. Currently states have until December 14, 2012 to inform the Obama Administration whether they will run their own exchanges working in partnership with the federal government, or leave the entire task to the HHS. The current December 14, 2012 deadline has already been pushed back twice to its current date, so it seems this isn’t a hard and fast date to which the states need to adhere.

The Costs of a State Health Insurance Exchange.

It is important to note that while this federal mandate is being called a “State Health Insurance Exchange,” the federal government will have ultimate control of the exchange. The federal legislation Sec. 1311 states,

“An Exchange may not establish rules that conflict with or prevent the application of regulations promulgated by the Secretary [of Health and Human Services].”

So the true nature of the State Health Insurance Exchange is that the state is burdened with the complete financial obligation of the exchange and has no other input into the matter. As I’ve noted previously, current state costs for the are just estimates or best guesses. Arizona estimates show it will likely cost $60-70 million a year. Minnesota’s exchange is expected to cost $54 million beginning in 2015. That cost is more than the previous expected $30 – $40 million.

One has to wonder which governor will step forward and bring suit against the federal government for the irreparable harm brought by the creation of the exchanges and the fundamentaly, unpopular and complicated federal legislation.

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