Health Insurance Exchange Services

for State Governments

Depending on the Supreme Court's decision regarding the constitutionality of the health care reform individual mandate, state governments may need to act quickly to meet the complex requirements of establishing health insurance exchanges as required under the Patient Protection and Affordable Care Act (PPACA).

State governments are being thrust into a new role as they begin the Herculean labor of establishing health insurance exchanges — one of the most administratively complex efforts in American history and an essential component of health care reform.

Under PPACA, every state is mandated to establish its own exchange by January 1, 2014, or have the federal government run a health insurance exchange on its behalf. In addition, states must have detailed operating plans in place at least one year prior to the full implementation of the insurance exchange.

The health insurance exchanges place numerous new responsibilities and requirements on state governments to build virtual marketplaces so individuals can shop for, compare and enroll in affordable health insurance plans. The exchanges are expected to provide coverage to employees of small businesses and to an estimated 24 million individuals — 19 million of which may receive tax credits or government subsidies. In 2017, states may decide to allow larger businesses to participate as well.

State-based health insurance exchanges will dramatically change the way businesses and individuals obtain health care coverage. To succeed, states must first understand the complicated requirements of the exchanges. Once states understand exchange requirements, they must choose an exchange model that can encourage marketplace competition and deliver affordable health care coverage.

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State Mandated Activity

In response to the health care reform bill, many state legislatures and governors have begun establishing the infrastructure for implementing the new law and meeting its mandates — including the requirement to create and operate a state health insurance exchanges. States have been given the following deadlines:

January 1, 2013, is the deadline for states to have detailed operating plans in place for having their health insurance exchanges up and running.

January 1, 2014, is the deadline for states to launch their health insurance exchanges.

Beginning in 2017, larger businesses may be be able to seek coverage for employees through the exchanges.