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Monday, June 18, 2012
Feds: Hawaii Too Small to Succeed with Health Exchange
By NCPA @ 1:57 PM :: 8478 Views :: Energy, Environment, National News, Ethics

Some States Too Small to Succeed with Health Exchanges

From NCPA

A lot of states will find out later this year if they're going to have to depend on the Department of Health and Human Services to start up their health insurance exchange. That's partly because setting up exchanges is technically complex and partly because many states have moved slowly, if they've moved at all, because of the political and legal uncertainties surrounding President Barack Obama's health law, says Politico.

A small group of states are facing an entirely unique issue: exchanges simply are not financially feasible because the states are too small.

States affected by this problem include Delaware, Hawaii, Montana, New Hampshire, North Dakota, Rhode Island and Vermont, as well as Washington, D.C.

The decision facing them is whether they will continue to attempt to create state-run exchanges (despite the financial pitfalls) or if they will run partnership exchanges with the federal government.

Three of the states and the District have all approved exchange legislation indicating their intention to have a state-based exchange.

Others remain mired in uncertainty as to which option they will select.

Delaware's situation is illustrative of the problem: because so few people live in the state, there would not be enough enrollees in a state program in order to recoup administrative costs.

In Delaware, no more than 50,000 to 60,000 people, mostly in the individual market, would be enrolled in the exchange by 2019.

The state projected only 35,000 covered lives for the 2014 launch, according to a consultant's report.

Crystal English, Delaware's health insurance exchange project director, explains that having so few enrollees to share administrative costs would likely result in higher premiums, which admittedly is not the goal of the exchanges.

In response to this issue, Delaware will run a partnership exchange with the federal government in which responsibilities and expenses are split between the two levels of government.

This difficulty for smaller states was recently confirmed by a top Health and Human Services official, who acknowledged that it doesn't make sense for some of the small states to build an exchange entirely on their own.

Source: Jason Millman, "Some States Too Small to Succeed with Health Exchanges," Politico, June 10, 2012.

 

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