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New rules aim to ease state-run health insurance exchanges

The exchanges are a key feature of President Obama's healthcare law, but questions — and criticism — have grown as the deadline approaches for setting them up.

March 12, 2012|By Noam N. Levey, Washington Bureau
  • Health and Human Services Secretary Kathleen Sebelius testifies during a hearing on Capitol Hill.
Health and Human Services Secretary Kathleen Sebelius testifies during… (Mark Wilson / Getty Images )

Reporting from Washington — In the face of mounting resistance from Republican state leaders and other critics, the Obama administration moved Monday to ease development of state-based insurance exchanges, a key feature of the new healthcare law.

The law envisions that states will set up these exchanges for Americans who do not get health coverage from their employer or who work for small businesses.

More than 30 million Americans ultimately are expected to use the exchanges, which are designed to allow consumers to shop online for health plans in 2014 much as they shop for hotels or airplane tickets. Many Americans will qualify for federal aid to help them buy coverage.

But the administration has been wrestling with how to set standards for the exchanges to protect consumers without saddling states, insurers and businesses with crippling new regulations.

That has become a growing concern as the deadline for setting up the exchanges approaches. States must decide by the end of the year if they are going to run their own exchanges or let the federal government operate them. Insurers also are scrambling to figure out how to adjust their health plans to meet new requirements in the health law.

The rules issued Monday give states some flexibility in deciding how to run their exchanges, while also allowing states that are not ready by 2014 to get help opening their exchange a year later.

"These policies give states the flexibility they need to design an exchange that works for them," said Health and Human Services Secretary Kathleen Sebelius.

But it remains unclear whether the rules will be sufficient to overcome political resistance in many Republican-led states to establishing anything that would support the law. On Monday, Virginia Gov. Bob McDonnell, who chairs the Republican Governors Assn., criticized the new regulations as inadequate because they did not address key questions such as what a federal insurance exchange might look like.

Thus far, only 12 states and the District of Columbia have passed legislation creating some kind of state-based health insurance exchanges, according to the National Conference of State Legislatures.

Leading consumer groups were more supportive. They praised new protections designed to give consumers representation in running new exchanges. Industry groups praised rules that give small businesses more choices in deciding what coverage options to give their employees

But many remain concerned that key regulations have not been issued.

"Even if everything goes perfectly down the line, it is going to be tough to get to the opening bell," said Neil Trautwein, a vice president of the National Retail Federation.

noam.levey@latimes.com

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