Virginia assembly ambivalent on health exchange

‘Place-holder’ bill called contingent

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RICHMOND — Virginia legislators appear at odds over how — or even whether — to move forward with a state-run health insurance exchange mandated by President Obama’s health care overhaul during the 2012 General Assembly session.

Secretary of Health and Human Resources William A. Hazel Jr. said Monday that the administration right now does not think it needs to ask for legislation on the matter, and that there was still too much planning for anything to be prepared.

But Delegate Terry G. Kilgore, Washington Republican and chairman of the House Committee on Commerce and Labor, said Monday he filed a request for a “place-holder” bill should the assembly decide to act on setting up an exchange.

“Looking at the deadlines we’re facing … someone’s going to have to do something this session,” he said. “I don’t want to take a chance on the federal government running it.”

According to the law, a state-run exchange must be “on the way to being operational” by January 2013 or the federal government will step in and implement its own — giving legislators precious little time to push a formal plan during the regular 2012 session, should they choose to do so.

The exchanges are marketplaces where individuals and small businesses can purchase insurance and browse various plans. The state estimates that 520,000 Virginians will gain insurance coverage through the law — 420,000 through the expansion of Medicaid, the federal-state health insurance program for the poor, and an additional 100,000 through private insurance.

When Gov. Bob McDonnell, a Republican, released his advisory council’s recommendations for the exchange to legislators last week, he did not take a position on them. He did, however, attach a letter reiterating his staunch opposition to the law and blasting the federal Department of Health and Human Services (HHS) for not providing enough guidance to states as they work to comply with it.

“The governor’s looking at the recommendations,” Dr. Hazel told legislators at a joint meeting of the House and Senate Commerce and Labor committees. “We do believe that he gave us the latitude to implement and plan on a very tight time frame, should we get the go-ahead.”

The federal government will pay all of the Medicaid costs for the first three years after the law takes effect in 2014, after which the subsidy eventually dips down to 90 percent.

Delegate Johnny S. Joannou, Chesapeake Democrat, expressed concern throughout the meeting about the bottom line — but hoped for a few escape hatches.

“It depends on what this next election brings. … There’s the possibility that this act can go down the drain,” he said. “I’m just hoping that our attorney general will prevail. I’m hoping that some of the other attorney generals will prevail, and that’s as far as I’m going to go.”

The U.S. Supreme Court announced earlier this month that it would hear arguments in March on whether the so-called “individual mandate” requiring nearly every American to eventually purchase health insurance or pay a penalty is unconstitutional. The high court has put off deciding on whether it will hear Virginia Attorney General Kenneth T. Cuccinelli II’s challenge.

Virginia has already received $1 million in federal money for planning the exchange. There is a June 29, 2012, deadline to apply for a grant to create and operate one, though Dr. Hazel said that HHS anticipates extending that deadline.

The exchanges are supposed to be self-funded by 2015. Assuming half a million people participate, operating an exchange in the state could cost up to $60 million a year, according to Frank Munyan with the state’s Division of Legislative Services.

Last Tuesday, HHS awarded nearly $220 million in grants to 13 states to help them create exchanges.

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