Obama Pushes for State Help on Health Exchanges

By David Morgan

WASHINGTON (Reuters) Aug 13 - The Obama administration this week will try to encourage reluctant U.S. states to move forward with health insurance exchanges amid fears that time is running out for states to act on a reform provision meant to extend coverage to millions of low-to-moderate income uninsured Americans.

The U.S. Department of Health and Human Services has scheduled four regional meetings this month to discuss the exchanges and other aspects of President Barack Obama's healthcare reform law with state officials and others.

The meetings begin on Tuesday in Washington, D.C., and continue in Atlanta, Chicago and Denver until August 22.

Experts say time is short for states to begin setting up health-insurance exchanges - regulated online marketplaces where families and individuals can purchase private insurance plans at rates subsidized by the federal government.

Because the healthcare law requires Washington to set up federal exchanges in states that do not create their own, the administration could face the daunting task of establishing federal exchanges in dozens of states - raising questions about a possible delay in the implementation of reform.

"They need a lot of cooperation from the states in order to succeed," said Joel Ario, a former director of the administration's Office of Health Insurance Exchanges.

The idea of exchanges, much like the overall healthcare reform law known by critics as "Obamacare," has become an election-year flashpoint for several Republican governors who reject the exchanges plan along with the Medicaid expansion as too costly and bureaucratic.

The exchanges are key to the Patient Protection and Affordable Care Act's goal of providing coverage to more than 30 million uninsured people.

As originally envisioned, the exchanges would provide subsidized coverage for 16 million uninsured Americans with annual incomes of up to about $88,000 for a family of four.

The law calls for states to decide later this year about whether they will set up exchanges themselves, and calls for the exchanges to open enrollment in October 2013 with full operations beginning January 1, 2014.

But some analysts wonder if the administration can cope with the bureaucratic and political logistics necessary to have federally facilitated exchanges running on time in a large number of states.

"It is a distinct question, which makes you wonder if at some point next year there will be a decision made to give states more time, or let the ones that are ready move ahead on their own," said Paul Ginsburg of the Washington-based Center for Studying Healthcare Change.

Only 15 states have passed legislation or issued executive orders to establish exchanges, while seven have decided not to create exchanges at all, according to the nonpartisan Kaiser Family Foundation, which tracks healthcare issues.

Many of the remaining 28 states are waiting to see which party controls the White House and Congress after the November 6 election.

Republicans led by the party's presidential nominee Mitt Romney have vowed to repeal the Affordable Care Act and replace it with their own policies, although Republicans have released few details for such a plan.

Experts say the federal government should have little trouble setting up an information technology system for consumers to shop for health insurance plans online.

A greater harbinger of success for federal exchanges is the degree of cooperation the administration receives from states in vetting insurers and health plans, determining eligibility and providing consumer service and support including call centers.

"If they have to do that in 40 or 45 states, that's a very tall order," Ario said.

Ario said the administration has sought to show flexibility for states, including a decision to allow states to set their own benchmarks for the essential health benefits that would be offered through their exchanges.

The administration has also given states the option of running an exchange in partnership by sharing operations with the federal government.

Officials say the aim is to assist states with partnership exchanges and federal exchanges that can later transition into state-run operations.