Future of state health insurance exchange remains undecided

By Caroline Klapper | Dec 19, 2012

Despite North Carolina Gov. Bev Perdue’s announcement last month that the state will pursue a partnership health care exchange — one that shares responsibility with the federal government — the final decision lies with the Republican-led General Assembly and Governor-elect Pat McCrory, also a Republican.

“Things are still up in the air,” said Brad Deen, a spokesperson for North Carolina’s Department of Health and Human Services. “It’s kind of wait and see right now.”

The Affordable Care Act calls for the establishment of affordable insurance exchanges to provide uninsured individuals and small businesses with access to health insurance coverage beginning on Jan. 1, 2014. The vision is for a system where consumers can compare plans, prices and sign up for the one best-suited to their needs.

Originally, the deadline to declare what type of insurance exchange the state would pursue was Nov. 16, but it was moved back and is now Feb. 15, 2013.

For North Carolina, options will be limited because the state senate didn’t pass a bill earlier this year that would have allowed for a state-based health exchange, something that takes considerable time to set up. Under state control, it would be North Carolina, not the federal government that monitored the exchanges.

Now the state has one of two remaining options — a state/federal partnership exchange or a federally-facilitated exchange. Offering no program in a state is not an option.

In a state/federal partnership exchange, the state operates plan management and consumer assistance, but can elect to perform services for the reinsurance program and Medicaid and CHIP eligibility assessment or determination, or it can use federal government services for those activities.

Under federally-facilitated exchanges, the U.S. Department of Health and Human Services operates the exchange, but the state can elect to provide services for the reinsurance program and/or Medicaid and CHIP eligibility, assessment or determination.

Perdue said she prefers a state-operated exchange, but since that wasn't approved, she applied for the state/federal partnership option to keep options open for McCrory and the incoming legislature.

Sen. Jim Davis criticized the Governor's declaration to pursue a federal/state partnership as it “was not necessary or appropriate. The voters elected a new legislature and governor and policy decisions of this magnitude should be left to them,” he wrote in a news release.

However, state departments had to submit applications or federal grant money to set up the exchange by Nov. 15, which prompted Perdue's announcement.

“The same day the governor made her announcement was the due date for the federal grant,” said Kerry Hall, director of public information with the state Department of Insurance. “In applying for this grant, it was a way for us to preserve the options for the state.”

The N.C. Department of Insurance has asked for a $73.5 million grant to use mostly in establishing the technology components for an shared federal-state exchange and the rest would go toward human services and planned management.

“(We) have been working on this for a couple of years because it is federal law,” Hall said, adding with the deadline to establish an exchange looming a little more than a year away, a fully state-based exchange probably is no longer feasible to start with. “But we can lay the groundwork for a state-based exchange. We’re still waiting on more direction from either the new governor or the new legislature.”

DHHS also applied for a federal grant to help establish an infrastructure to handle eligibility determination and enrollment for the health exchange, Deen said.

“This is going to expand our current system,” he said, adding he doesn’t know when the department will find out if they got the grant.

But even if both departments get the grant money, the state still has options. The incoming legislature can return any grant funds that might be received and opt for federal control, or can continue along the path of shared responsibility with the federal government. In time, state leaders could still decide to move toward the state-control solution. This choice allows the state to still use federal government services for things such as premium tax credit and cost sharing reduction, exemptions, the risk adjustment program and the reinsurance program.

Basically, Deen said, the state is doing what it can to prepare for any eventuality.

“We have to be able to plan for eventualities, and when a decision is made, we have to be able to hit the ground running,” Deen said.