States have quietly found a way to partner with the federal government on their health insurance exchanges without actually forming a politically treacherous partnership.
Virginia announced in February that it would retain oversight of plans. Earlier in March, the federal Centers for Medicare & Medicaid Services granted plan management authority to Montana, Nebraska, Ohio and Kansas, all of which have federally facilitated exchanges.
Those five states won't be the last to seek control over exchange plan regulation. These state exemptions also expose an interesting wrinkle in how exchanges might evolve. A state-regulated, Health and Human Services-operated exchange sounds a lot more like a partnership than an FFE.
The move makes sense for HHS. It already has a full plate of FFEs to run, and delays will likely force even more states to default to a federal exchange. This gives states skin in the game. Plus, that regulatory control acknowledges that most states already know best how to oversee their health plans and markets.
The move makes more sense for the states. By retaining oversight of plans involved in their exchanges, those states skip the debate and retain a greater degree of control than do states simply washing their hands of exchange operation.
Look at Michigan, where progress stalled on Gov. Rick Snyder's partnership exchange. Delays have squashed the state's chance for anything but an FFE. In any of the five states deputized by the federal government, exchange bills have been DOA. But insurance departments retain a traditional role.
The willingness of HHS to cede plan-management authority hints that giving them a foot in the FFE door could compel states to take over operations down the road. States would essentially let the federal government run their exchange during the tough, early years. Once exchanges work out the bugs and become established, states might vie for more involvement.
The FFE might become an institution in states adamantly opposed to the Affordable Care Act, but extending a little control should make states more comfortable assuming a stronger role later.
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