States must make health care decisions

The deadline for states to decide whether they'll run their own insurance exchanges is looming.

It's decision time again in health care.

No, not for you. States are making this one. Namely, whether they will operate their own health care exchanges or let the federal government do it. They've got til Friday to decide.

Exchanges, you'll remember, are the online sites where small businesses and people who aren't insured at work, will be able to shop for health insurance starting in 2014.

States? The fed? You may be wondering what difference it makes anyway.

Well, here’s one difference, says Georgetown professor Sabrina Corlette: power.

“A state that’s going to run its own exchange has an opportunity to really change the entire health care landscape if it wants to do that,” she says.

So for example, says Corlette, say a state has a big obesity problem. The state can make sure all the insurance plans on the exchange cover programs aimed at reducing obesity.

“Essentially the state is using its market clout to get the health plans and the providers to change their behavior and reduce healthcare costs over the long run,” she says.

But more than half the states aren’t expected to go that route; they’ll let the federal government operate their exchanges.

With that, though, comes predictability. Sonya Schwartz at the National Academy for State Health Policy thinks that could be attractive to insurance companies.

“Health plans may be able to just come to the federal exchange and fill out their information and select multiple states all at once, rather than going to one state at a time,” says Schwartz.

Everybody wants lots and lots of insurers offering plans on the exchanges. The theory goes the more competition, the lower the price.

So I ask Robert Zirkelbach with America’s Health Insurance Plans what the industry prefers.

“It’s too early to know how the federal exchange will compare to what the state exchanges are going to look like,” he says.

Here’s the thing -- insurers have concerns either way. With Washington at the helm, they worry about extra regulation. States on the other hand, can set standards that make it harder and more costly for companies. No matter what happens, states and the federal government will be racing to get exchanges in place.

And Bryce Williams with the consulting firm Towers Watson says there’s a lot that can go wrong.

“There are definitely going to be some bumps in the first few months and years of these state exchanges going live,” says Williams.

Overall, most health care analysts agree the shopping experience -- going online to pick a plan -- won’t be much different between a federal and state exchange.

The real question is: Will insurance be cheaper in one state over another?

The answer: We don’t know. And probably won’t for a while.

About the author

Dan Gorenstein is the senior reporter for Marketplace’s Health Desk. You can follow him on Twitter @dmgorenstein.

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