WASHINGTON — Half the states in the country have refused to create the health insurance exchanges called for under the health care reform law, according to data compiled by the Henry J. Kaiser Family Foundation.
As of late last month, 18 states and the District of Columbia intended to operate their own exchanges. Another seven, according to the Kaiser foundation, will operate exchanges in federal-state joint ventures.

That leaves the federal government to establish exchanges in 25 states to help the uninsured gain coverage.

“We’re looking forward to January 1, 2014, when consumers and small businesses will be enrolled through the exchanges in private health insurance plans and millions more Americans will have the coverage they need and deserve,” Health and Human Services Secretary Kathleen Sebelius wrote in a blog entry.

State-based health insurance exchanges are a core provision of the health care overhaul that President Obama signed into law during his first term. Each exchange will operate a website where uninsured state residents and small employers can compare various health plan options, akin to the way consumers shop online for hotel rooms and airplane tickets.

Enrollment in exchanges is due to begin October 1. To meet that deadline the White House and its contractors must create a federal exchange that can be rolled out in states lacking their own and build a central database where states can verify a person’s eligibility for tax credits, premium subsidies and other health programs, such as Medicaid and the Children’s Health Insurance Program.

Most states with Republican governors have chosen to default to a federal exchange. Just five GOP-led states will run their own exchanges, and two will partner with the federal government. Avalere Health forecasts that about two-thirds of the 8.2 million people expected to buy coverage through exchanges in 2014 will do so through a federally administered or partnership exchange.

To foster participation in exchanges, a nonprofit group called Enroll America was formed in 2011. Through late December the organization had raised just $6 million but had financial backing from associations of branded and generic drug makers as well from Aetna and Blue Cross Blue Shield. Insurance companies, for the most part, had opposed health care reform but now stand to gain from its success.

Besides setting up exchanges, the health care law is designed to help some 30 million uninsured Americans by expanding Medicaid and creating subsidies for lower-income people to buy private coverage. The White House has turned down requests from several states for a partial expansion of Medicaid, which would pay for fewer people than the president and Congress intended. Some states want to broaden the entitlement program to cover childless adults with incomes up to the poverty level, which is $19,090 for a family of three.

But the government said it would fully cover the cost of newly eligible Medicaid beneficiaries only if a state raised the threshold to 133% of the poverty level — or 138%, with an adjustment allowed by law. This would assure Medicaid coverage for a family of three with an income of $26,340 or less.

According to The New York Times, Matt Salo, executive director of the National Association of Medicaid Directors, which represents state officials, said the administration’s position was: “No partial expansion of Medicaid. No phased-in expansion. It’s all or nothing.”

In upholding the health care law in June, the Supreme Court said the expansion of Medicaid was optional for states, not the mandate depicted by the administration. That notwithstanding, the White House hails the expansion as a good deal for states because the federal government would pay the entire cost of Medicaid for newly eligible beneficiaries from 2014 to 2016 and then 90% or more of costs in later years.

Republican governors remain unimpressed. “The Obama administration’s refusal to grant states more flexibility on Medicaid is as disheartening as it is shortsighted,” said Gov. Bobby Jindal of Louisiana, the chairman of the Republican Governors Association.
The White House policy, he said, “will make a state’s decision on Medicaid expansion more difficult,” according to the Times.