- The Washington Times - Tuesday, November 29, 2011

Love it or hate it, states across the country are facing a looming dilemma over whether to get to work implementing a key component of President Obama’s massive health care overhaul.

With deadlines approaching to set up mandatory state-level “exchanges” to offer affordable health insurance, some states are scurrying to get started, others are refusing to play by the rules and still others are falling somewhere in between.

Some states, banking on the Supreme Court or the next Congress and president to tear down key parts of the health care law, see no point in even putting in the preparatory spadework.

“Where there’s an escape valve, there’s really no first-mover advantage for states to jump into this, especially when we don’t know what’s going to happen next summer and in the election,” said Tony Keck, director of South Carolina’s Department of Health and Human Services.

Underscoring the confusion, the Obama administration announced Tuesday that 13 more states have been awarded some $220 million in grant money to help set up the insurance exchanges by 2014. Seven of those states are suing the administration over the constitutionality of the law.

Health and Human Services Secretary Kathleen Sebelius told reporters it was natural that states were moving at different speeds in embracing the new requirements.

“States are moving at their own pace to get their exchanges up and running,” she said. “This is a natural result of a process that gives states maximum flexibility.”

From California, where legislators approved an exchange just months after the Affordable Care Act was enacted in 2010, to South Carolina, where attempts have been shot down by the legislature, states face decisions. Will they set up their own exchanges? And if so, what will the exchanges — the centralized “marketplaces” where individuals and small businesses can browse through insurance products — look like? Or will states simply opt for letting the federal government run an exchange for them, as the Obama law provides for?

For the 28 states suing the federal government over constitutionality of the health care law, it’s tempting to bank on it being overturned by the Supreme Court or even by Congress, depending on how next year’s elections turn out. Still, those outcomes are by no means certain.

But even states looking to comply with the law are taking different tacks on the exchanges, which aim to expand access to health coverage by simplifying options for consumers and offering more government subsidies while still offering states broad latitude in how to set them up.

While they have until 2014 to have them up and running, the states must demonstrate ample progress by Jan. 1, 2013. If they’re not ready in time, the federal government will step in, but states still can apply to reassume control.

Sixteen states have enacted legislation that moves them closer to setting up an exchange, while another dozen or so aren’t taking much action at all. The rest are proceeding more slowly, waiting on advice from advisory committees or working on legislation for next year. States involved in the lawsuits can be found in each of the categories.

“You have the vast majority of states that are somewhere in the middle,” said Cheryl Smith, a director for Leavitt Partners, a Salt Lake City-based firm that advises states on insurance exchanges. “Whether they like it or not, they understand it’s the law. Even if they’re speaking out against the exchanges, they are still doing work.”

An example of that tactic is Colorado, which has joined Florida and 24 other states to challenge the individual mandate requiring Americans to obtain health insurance in a case that will be heard by the Supreme Court next year.

At the same time, the state is moving quickly to set up an exchange, deciding to run it as a quasi-governmental agency that operates as a nonprofit but whose board members are appointed by the governor. The state was on track to set up an exchange even before the Affordable Care Act became law, so state lawmakers were in widespread agreement, said Lorez Meinhold, who is overseeing the creation of the exchange.

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