Another challenge is creating and supporting the online marketplaces where individuals will find the insurance plans. Nine states have refused to expand their Medicaid systems to cover new populations -- leaving a gaping hole in those states' coverage expansions. About 20 have decided not to help build the state insurance exchanges where individuals will be able to shop for plans. The federal government is planning to intervene in those states and install its own exchanges, but it's clear that uncooperative states will be able to throw a few wrenches into implementation.
When individuals come to seek insurance, they will be interacting with brand-new systems. Aside from Massachusetts, no state has built the kind of regulated online insurance marketplace outlined in the health care law. The idea is for each state to have a website similar to what Kayak is for travel: People will go online, answer a series of standardized questions, and immediately find out what insurance plans they can purchase and what financial assistance they qualify for.
The back-end labor involved in building the necessary IT infrastructure has proven to be tremendous and full of unexpected complexity, say officials in the states that have been working most diligently to create their own exchanges. The exchanges must be able to communicate with a yet-to-be-built federal eligibility database; state-based, often antique, Medicaid computer systems; and the many insurance plans that wish to sell in the market. The vendors building the systems are starting from scratch, and regulations spelling out the precise specifications for data connections are still pending.
Connecticut's exchange plan was conditionally approved by HHS this week, putting it near the head of the pack. Still, Kevin Counihan, CEO of the Connecticut Health Insurance Exchange, said that getting to the finish line in time will be a scramble. "Do I think it's going to be ugly getting there? You bet," he said. "If everything works perfectly, we're fine. But things don't work perfectly in life, and they certainly don't work perfectly in IT development."
In the states that don't want to help, additional challenges are coming. Some parts of the federal apparatus can be identical in every state where it's operating. But the federal exchange will need to be tailored to meet the regulatory and eligibility standards in each state, an effort that could be complicated by recalcitrant state officials. Medicaid systems that cooperate only minimally could undermine the "no wrong door" approach behind the exchange design. Instead of a few clicks separating consumers and health insurance, Medicaid-eligible populations in some states may instead be forwarded to a separate eligibility and enrollment system managed by state officials.
Aside from Massachusetts, no state has built the kind of regulated online insurance marketplace outlined in the health care law.
Gary Cohen, the head of insurance oversight at HHS, said this week that the federal government will be ready to do its part in time. It's hard to know, however, because the final regulations and technical specifications for the federal exchange are still outstanding.
The skeptics are worried. Michael Cannon, the director of health policy studies at the libertarian Cato Institute, who has been advising state officials to fight the law through noncompliance, says he thinks HHS is behind schedule. "They have very little time to do this, and they really need the manpower," he said. "An indication of how difficult this is for the federal government is that they aren't telling anyone what kind of progress they've made."
Oklahoma has sued the federal government, arguing that the health care law's statutory language means that federal tax credits can't be offered in a federally run exchange. Maine has argued that the Supreme Court ruling about the law's Medicaid expansion throws other Medicaid provisions into question. Both suits are considered long shots, but they are evidence of the strong opposition that some states continue to express, even as the exchanges' effective date draws near.
Of course, there are politicians and there are bureaucrats. Officials in even the reddest of red-states have been quietly preparing for implementation. Michael Koetting, the deputy director for planning and reform implementation for the Healthcare and Family Services Department in Illinois, which will be sharing exchange-management responsibilities with the federal government, said he frequently talks to his counterparts in other states at meetings called by federal officials. "They want to make all of this work out somehow," he said. "The difference between that meeting, and, say, a meeting of the governors' association on exchanges that I went to is palpable."
The law creates these marketplaces for the minority of people who buy their own health coverage, but it also creates a raft of new rules for employers, still the dominant providers of insurance in the country. Any employer with the equivalent of more than 50 full-time workers is required to offer affordable coverage that meets minimum benefit standards for all of its employees who work more than 30 hours a week.
It will be a big change for nearly every company. For the largest corporations, which already offer comprehensive coverage to their salaried workers, these changes are significant but not too disruptive. But industries that have traditionally relied on hourly workforces or operate on tight margins are struggling to fit the rules into the law's employment model. If they fail to offer coverage, they will pay a per-employee penalty. If they offer coverage, but employees still buy on the exchanges, they will pay a penalty, too.