States push forward on exchanges

NATIONAL REPORTS-Industry experts say although it seems early for states to establish insurance exchanges, they shouldn't risk waiting too long.

State exchanges must have adequate infrastructure by January 2013. If not, the federal government will implement the exchange on behalf of the state by default. Simply not acting in time decides that the federal government will operate a state's exchange.

Samuel C. Gibbs, senior vice president of eHealth, Inc.-parent company of eHealthInsurance, an online private exchange-says that the real issue is time. Twenty-seven states have moved to block exchange participation as they wait for court rulings on the health reform law, and yet some departments of insurance are still starting the process.

In fact, most states are taking advantage of the federal government's funding, and all but two took the $1 million in funding grants.

"When broken down into smaller, individual components, the reality is that vendors with working versions of exchanges already exist in the marketplace," Gibbs says.

In order for some uniformity in the health plans offered to individuals, federal government oversight and regulation will define the exchange products. It's this wholesale change of the marketplace that complicates things for carriers.

According to Gibbs, it's likely that the new marketplace will allow opportunities for carriers to offer certain products in private exchanges along with a variety of plans in state exchanges.

"The law is flexible enough that even though the states mandate certain benefits, it's really a minimum level," says Gibbs. "So carriers have some flexibility in designing those plans."