Government and industry experts say recent guidance from the federal government will hasten development of state insurance exchanges, mandated under the Accountable Care Act to give consumers and small employers a one-stop shopping site to compare and purchase health care coverage. The exchanges, in turn, will affect employers' long-range benefit sponsorship decisions.

Experts say that over the next 18 months, states will be learning more about expectations, potential models and necessary partnerships. States must build the exchanges by 2014; they must notify the federal government by 2013 if they will not build an exchange, in which case the feds will provide one.

In July, the Bipartisan Policy Center and Kaiser Family Foundation sponsored a program in Washington, D.C., to explore the 230-page state insurance exchange guidance from the Department of Human Services.

To date, the government has distributed millions of dollars to states seeking to establish health insurance exchanges. However, only 14 states have passed laws enabling legislation. Many observers expect a flurry of activity in the next session of state legislatures, beginning in January 2012, while others will proceed via gubernatorial executive orders.

The efforts will depend on the fragile economic recovery affecting state revenues. Ray Scheppach, a University of Virginia professor and chair of the Bipartisan Policy Center's Health Project Insurance Market Reforms Initiative, says there are likely to be ongoing tensions between state and federal governments about exchange implementation rules. However, he adds, there is substantial state support for exchanges, and he believes the states will live up to their roles as "laboratories of democracy."

The goal of exchanges, to create a more organized and competitive insurance market, would offer a choice of health plans, establish common rules for offering and pricing insurance, and help consumers understand their options. The exchanges will be open to employers with up to 100 employees in 2014. In 2017, states will allow employers with more than 100 employees to purchase coverage for through an exchange.

But how useful the exchanges will be remains to be seen. Thus far, it appears that exchanges will fall into one of four categories:

1. Information aggregator: Delivers bare-bones capabilities to meet legislative requirements. Enrollment transactions are passed on to health plans' web sites.

2. Retail-orientation: Creates a retail shopping experience with robust service capabilities. Offers a broad range of products varying by price, design and consumer assistance capabilities.

3. Guided exchange: Limits carriers through a competitive selection process. Products may be standardized. This is a potential interim model for states short on funding.

4. Market curator: Robust end-to-end consumer experience from shopping to enrolling and providing extensive customer service, while limiting carriers through a competitive selection process.

Through the latest HHS guidance, federal officials have demonstrated flexibility and willingness to "meet states where they are" in 2013, according to Steve Larsen, director of the Center for Medicare and Medicaid Services' Center for Consumer Information and Oversight.

As state insurance exchange developments unfold, many officials remain optimistic about the prospects for implementation. Among them, former Ohio Governor Ted Strickland, state co-chair of the Bipartisan Policy Center's Health Project, says "the creation of exchanges is an opportunity to foster public-private partnerships that result in better health for all Americans."


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