States and the federal government are doing all they can to make sure the Health Insurance Exchanges – also called Health Insurance Marketplaces – open on time, on October 1 this year. The rush to make sure everything is ready explains some of the recent news to delay certain requirements for employers and small businesses under Obamacare. Those delays primarily affect states with federally run exchanges.

So how are the state-based exchanges coming along? A recent Commonwealth Fund brief has the update.

Exchange Implementation Delays?

Delay has been the theme of news about Obamacare lately. Earlier this month, the White House announced it would delay enforcement of the controversial employer mandate and reporting requirements for employers with at least 50 full-time equivalent employees.  Specifically, the White House says it would delay until 2015 the requirement for employers in that category to offer workers health insurance or face a penalty. The requirements are more complicated than that, of course, and you can read the details in this Congressional Research Service brief.

In June, the Centers for Medicare and Medicaid Services (CMS) released its final rule for the Small Business Health Options Program (SHOP), the small group marketplace of the Health Insurance Exchanges under the Affordable Care Act (ACA). Previously, the plan had been for all small employers to allow their workers to pick their own plans on the SHOP markets in 2014. Now, small employers will not be required to do so until 2015.

For a little more information on recent changes to ACA implementation, check out this blog post from CMS Administrator Marilyn Tavenner, “Myth vs. Fact: Health Insurance Marketplace on Track.”

State-Based Exchange Progress Report:

The SHOP implementation delay affects states with federally facilitated exchanges, but the 17 states choosing to run their own exchanges can elect to delay the requirement or not. CMS and the health reform law set baseline requirements for state-based exchanges and the Qualified Health Plans (QHP) they offer consumers. All exchanges must be open for enrollment on October 1 of this year. Yet states have a fair amount of leeway in deciding how to regulate QHPs, how to reach out to consumers, and how to manage the many interwoven administrative functions that will make exchanges work.

Keeping track of how much progress those 17 states have made is an important job. Whether states are fully ready for customers on Oct. 1 or not will make a significant difference in the exchanges’ success, at least initially. So the Commonwealth Fund’s excellent staff has done a valuable service in publishing its new brief, Key Design Decisions for State-Based Exchanges. Here is a summary of the report, authored by Sarah Dash, Kevin Lucia, Katie Keith, and Christine Monahan of Georgetown University’s Health Policy Institute. They have also put together a neat interactive map of exchange progress.

Here’s an overview of the basic findings:

  • Funding: Seven states and the District of Columbia do not yet know how they will fund the exchanges in the long term. The most common funding mechanism for other states is a fee on insurers offering Qualified Health Plans. Maryland, Utah, and Vermont will rely on existing fees or taxes on premiums.
  • Plan Participation: Eight states, including D.C., will allow any QHP that meets basic requirements to participate on the exchanges. Six states will take a more active role and will limit the number and types of health plans each insurer can offer. California, Rhode Island, Massachusetts, and Vermont will select and contract with specific insurers.
  • SHOP markets: Only Idaho so far has decided to follow the federal government’s lead in delaying the ability of small business employees to choose QHPs individually. New Mexico has yet to decide. The rest will offer some form of employee choice in the SHOP exchanges. All 17 states defined “small employer” as one with less than 50 employees.
  • Outreach: 13 states and D.C. will run navigator and in-person assistance programs to help enroll customers in QHPs in 2014. Two states will only have navigator programs, and two other states have yet to decide. Outreach could play a big role in encouraging young healthy people to participate in the exchanges. If the sick are far more likely to enroll, premiums will rise and strengthen the disincentive for healthy people participate – a problem known as adverse selection.

Read the full brief here.