States Encountering Obstacles in Setting Up Insurance Exchanges

As state legislatures approach the end of their sessions, many states continue to struggle with whether to approve legislation to establish health insurance exchanges under the federal health reform law, CQ HealthBeat reports (Norman, CQ HealthBeat, 5/18).

Under the overhaul, states can choose to administer their own exchanges, for which they must have some infrastructure in place by January 2013, or have the government run the exchanges for them (California Healthline, 5/3).

Issues at Play

Although several states already have approved measures to implement an exchange, many are grappling with different opinions from politicians, health care providers and consumers about how exchanges should function. Fewer than 50% of states will have legislation in place at the end of this year's legislative sessions, according Joy Johnson Wilson, health policy director for the National Conference of State Legislatures.

Several groups have been working to help states implement exchanges. The National Association of Insurance Commissioners is developing draft white papers, which are expected to be used by states as models for legislation. States also are awaiting guidelines from HHS, which officials said would be out this spring. In addition, the BlueCross BlueShield Association this week issued an analysis that encouraged states to establish their own exchanges, rather than waiting for the federal government to run the programs. BCBS said the federal programs could create "duplicative and conflicting regulatory functions that will confuse consumers" (CQ HealthBeat, 5/18).

Del., Ind. Latest States To Seek Medical-Loss Ratio Exemptions

Meanwhile, Delaware and Indiana are the latest states to send letters to HHS Secretary Kathleen Sebelius to request a temporary waiver from new medical-loss ratio regulations in the federal health reform law, Modern Healthcare reports.

MLR rules require insurers to spend at least 80% of their premium dollars on direct medical costs.

Under Delaware's proposal, the state's current 60% MLR standard would increase to 65% this year, 70% in 2012, 75% in 2013 and 80% in 2014.

Indiana does not have an MLR requirement, but its letter proposed a similar phased in approach, where upon insurers would spend 60% of individual premiums on direct medical care this year, 68.75% in 2012, 72.5% in 2013, 76.25% in 2014 and 80% in 2015.

Twelve states and the territory of Guam have made these requests so far. HHS already has granted waivers to Maine, Nevada and New Hampshire (Vesely, Modern Healthcare, 5/18).