Health exchange law gives area officials a headache

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Photo - Patient getting blood pressure checked (File photo)
Patient getting blood pressure checked (File photo)
Local,Virginia,Steve Contorno

A complicated and costly provision in President Obama's health care reforms has area jurisdictions at odds on how best to move forward as a critical deadline looms.

States have until Friday to declare whether they plan to operate a state-run health insurance exchange -- an open market for uninsured residents to purchase coverage -- or let the federal government run one for them.

Virginia Gov. Bob McDonnell sent a letter Wednesday to Obama asking for an extension and criticized his administration's timetable for complying with the law since it passed in March 2010.

"It is clear that putting in place the new programs you championed will be an enormous strain on state governments and budgets, as well as the federal government," McDonnell wrote. "Many questions remain unanswered."

McDonnell, like many Republican governors, waited to take action in hopes the Supreme Court would strike down the health care law or a new Republican administration would repeal it. Neither happened. In the meantime, he ignored the recommendation of the task force he created, which suggested a quasigovernmental, state-run exchange over joining a federal exchange.

Democrats in Maryland, who moved swiftly to comply with the Obamacare mandate, were critical of McDonnell's approach. Maryland and the District, both run by Democrats, were two of the first jurisdictions to embrace the state-run option despite budget uncertainties. Maryland submitted its plans to the federal government six weeks ago, and D.C. will hand its in by Friday's deadline.

"For those states that sat idle on the sidelines, they deprived themselves of a choice because they haven't laid the necessary groundwork and now must default to federal government," Maryland Lt. Gov. Anthony Brown told The Washington Examiner.

But Maryland and D.C. are still struggling to figure out how to pay for all this. Maryland received $157 million in federal grants to help set up its exchange, but annual operating costs could reach $50 million a year. The District, which garnered $82 million in federal help, expects its exchange to cost about $25 million a year, with no revenue stream yet.

And even in the District, where the city council and Mayor Vincent Gray were receptive to the law, McDonnell's concerns were echoed.

"The time pressure is brutal," said Mohammad Akhter, head of the D.C. Health Benefit Exchange Authority. "Frankly, things have to be done so fast and so quick, there's not enough time to go through the whole litany of things to really look at all this."

D.C. officials also struggled to find enough residents in the city to make an exchange profitable. Because the District's Medicaid program is so expansive, only a small fraction of residents are uninsured.

To create a larger pool of people from which to draw, D.C. will require all individuals and small businesses with 50 or fewer employees to purchase insurance through the exchange once it's operational in October 2013.

D.C. explored creating a partnership exchange with Maryland but wanted an approach based in the private sector.

"Effectively, the Maryland exchange is an arm of state government," said Henry Aaron, of the Brookings Institution and board member for the D.C. exchange authority. "This is completely opposite to the approach the District is taking."

Virginia Democrats, who initially blasted McDonnell for delaying action, are now growing receptive to joining the federal exchange.

"We typically prefer state-run," said Sen. Janet Howell, D-Reston, "but given the drift of the General Assembly and the governor, we may be better off with federal."

scontorno@washingtonexaminer.com

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