Federal Health Insurance Exchange: Assessing benefits and disadvantages

With most of the U.S. States lagging behind in their Health Insurance Exchange implementation efforts, the U.S. government is likely to set up health insurance exchanges in all the ‘Red’ states. As expected, federal officials are busy drawing up blueprints of insurance exchanges for States that are still reluctant to set up state exchanges.

So, how are the States taking this? Well, for some States with a tight economic budget, transferring the responsibility of setting and managing the exchange to federal government may serve as a blessing in disguise, albeit for States that are proponents of local, state-level control, federal exchanges continue to be the least preferred option.

So what may be the likely advantages or disadvantages of allowing the federal government to run a health insurance exchange in a State? Insurers marketing their plans through the federal exchanges would need to interact and deal with both the state and the federal government which increases operational complexity for insurers. States too would have less power over the exchange management, policy implementation and determining the way how consumers interact with the exchanges. Not only this, as the Medicaid plans would also be administered via these exchanges, the States Medicaid program would also come under the federal radar and is likely to be managed by the federal government.

On the positive side, States would be freed from the complex task of setting and managing a health insurance exchange. States would no longer have to worry about the health insurance exchange technological, administrative, financial and other aspects, which reduce a lot of burden for these States.

With the deadline for submitting viable health insurance exchange blueprints just a few months ahead on January 1, 2013, States that have just begun their health insurance exchange implementation may already too late to deliver on this deadline so federal exchanges are likely to be set up in such states. For others which are en route to devising a state health insurance exchange strategy, the updates are still awaited.