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Originally published Friday, December 14, 2012 at 10:00 PM

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State-run health coverage has new setback

Friday was the deadline for states to notify the federal government of their health-care plans, and administration officials had hoped that President Obama’s re-election would overcome resistance to the health-care law.

The New York Times

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WASHINGTON — The Obama administration said Friday that more than half the states had rejected its pleas to set up their own health-insurance exchanges, dealing a setback to President Obama’s hopes that Republicans would join a campaign to provide health insurance to all Americans.

Friday was the deadline for states to notify the federal government of their plans, and administration officials had been hoping that Obama’s re-election would overcome resistance to the new health-care law.

Federal officials said they knew of 17 states that intended to run their own exchanges, as Congress intended.

Two of those states, New York and Kentucky, won conditional federal approval Friday for their plans to create and run state-based exchanges. Kathleen Sebelius, the secretary of health and human services, also approved an application from the District of Columbia.

But in Virginia, after more than a year of planning and research, Gov. Bob McDonnell said his state would not operate its own exchange. “Despite repeated requests for information, we have not had any clear direction or answers from Washington until recent days,” McDonnell said.

On Monday, Sebelius gave preliminary approval to state-based exchanges being established by Colorado, Connecticut, Maryland, Massachusetts, Oregon and Washington.

The exchanges are online supermarkets where people can shop for private health insurance and obtain federal subsidies to help defray the cost. The Congressional Budget Office has estimated 25 million people will eventually receive coverage through the exchanges.

Federal officials and federal contractors will set up and run the exchange in any state that is unable or unwilling to do so.

Gary Cohen, a federal health official, said the administration “has encouraged states to establish their own exchanges.” But, he added, consumers will have access to affordable health insurance in all states, regardless of who is in charge of the exchange.

The concept of an exchange is simple: Competition will drive down prices. But operating an exchange is an immense technical challenge requiring sophisticated information technology to digest and display huge amounts of data on the costs and benefits of various insurance plans.

The federal government and states face a series of deadlines in the new year. On Jan. 1, Sebelius must determine whether each state will be able to operate its own exchange in compliance with federal standards. By Feb. 15, states must notify the federal government if they want to help with select tasks, such as consumer assistance and the supervision of health plans, in partnership with the federal government.

On Oct. 1, consumers can begin to enroll in health plans for coverage starting on Jan. 1, 2014, when most Americans will be required to have insurance.

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