WSJ Editorial: Hope and Exchange

Hope and Exchange

The feds blame the states for refusing to become ObamaCare subsidiaries.

ObamaCare is due to land in a mere 10 months—about 300 days—and the Administration is not even close to ready, so naturally the political and media classes are attacking the Governors and state legislators who decline to help out. Mostly Republicans, they’re facing a torrent of abuse in Washington and pressure from health lobbies at home.

But the real story is that Democrats are reaping the GOP buy-in they earned. Liberals wanted government to re-engineer the entire health-care system and rammed the Affordable Care Act through on a party-line vote, not stopping to wonder whether it would work. Now that implementation is proving to be harder than advertised, they’re blaming the states for not making their jobs easier.

The current rumpus is over ObamaCare’s “exchanges,” the bureaucracies that will regulate the design and sale of insurance and where 30 million people (and likely far more) will sign up for subsidized coverage. States were supposed to tell the Health and Human Services Department if they were going to set up and run an exchange by October, but HHS delayed the deadline to November, and then again at the 11th hour to December.

Sixteen states have already said they won’t participate. Another 11 are undecided, while only 17 have committed to doing the work on their own. Six have opted for a “hybrid” federal-state model. That means HHS will probably be responsible for fallback federal exchanges in full or in part in as many as 25 or 30 states.


The opposition isn’t so much political as practical. Or rather, the vast logistical and technical undertaking to build an exchange helps explain why so many Governors resisted ObamaCare in the first place.

States have regulated the small business and individual insurance markets for decades (some well, others less so). Now they’re supposed to toss everything out for a complex Washington rewrite, which is still being rewritten. The exchanges will also help enforce the individual mandate and premium increases. They’ll also have to spend a ton of money. Ohio estimates it will cost $63 million to set up an exchange and $43 million to run annually, based on a KPMG study.

Getty Images

Health and Human Services Secretary Kathleen Sebelius

Most spending will go to information technology, in an era when many states still run Medicaid using paper forms and pneumatic tubes. These systems are supposed to allow consumers to review health plans online (or in person and by mail and fax), pick one and then ping HHS and the Internal Revenue Service to determine who is eligible for what subsidies. Private businesses spend years developing and refining such consumer software. States need to fund call centers to field queries and even hire “navigators” to actively encourage people to enroll.

The main problem is that states are being conscripted as federal contractors. HHS has declined to reveal basic operational details except to make clear that state-based exchanges won’t really be run by the states. “No matter which option is chosen,” as Scott Walker put it, “Wisconsin taxpayers will not have meaningful control over the health-care policies and services sold to Wisconsin residents.”

So if things don’t work voters will blame the Governors for decisions made in Washington. And when it turns out that ObamaCare’s costs are underestimated and its benefits exaggerated, they’ll have enabled an entitlement that many of their constituents oppose. The wonder is that any GOP leaders—ahem, Chris Christie and Rick Scott—are still playing Hamlet.

Partly that may be due to the insurance and provider lobbies, especially the hospitals. They’re furious that states might spoil the deals they cut with the White House and frantic for new revenue, which will only flow with the subsidies. (Note that health industry stocks rallied on President Obama’s re-election.) They’re also generally more powerful at the local level and favor state-run exchanges as easier to manipulate. But Governors who give in are setting themselves up as political fall guys, just as the insurers will be when premiums inevitably spike.

We suggested at first that states could try to spin straw into gold, ignore HHS and try to adopt a marginally less destructive approach. One state that tried is Utah, which built an impartial insurance clearinghouse in 2009 based on “defined contribution, consumer choice, and free markets,” as Governor Gary Herbert put it in a November letter to HHS.

Now he’s asking Washington to accept “Utah’s version of a health insurance exchange,” even though it clearly does not comply with Affordable Care Act provisions. HHS claims it is trying to be flexible, so this will be a useful test.

But the main reason HHS and ObamaCare partisans are trashing the state hold-outs is that the federal government isn’t any better equipped to make the plan a success. HHS’s reputation as one of the most dysfunctional agencies is notorious. To take one example, an ObamaCare-mandated update to a major computer network called the System for Electronic Rate and Form Filing, which governs insurance approvals, has been delayed by months.

HHS’s bandwidth is likely to be fried and its personnel overloaded by the workload of 25 exchanges or even 16. And the effort will be complicated by the serious legal questions and eventual lawsuits about the statutory authority of a federal exchange to dispense subsidies at all.


The Affordable Care Act barely passed and then barely survived Supreme Court review and the 2012 election. Now the entitlement is hurtling toward a truth-in-advertising moment and liberals are terrified that it won’t produce the results they promised. That was always likely given the central planning architecture of ObamaCare, but now the likes of Mr. Walker are declining to do their work for them and depriving them of scapegoats.

The day after ObamaCare passed, we invoked the “Pottery Barn” rule that Colin Powell once applied to Iraq: You break it, you own it. Washington is about to break it, and the states are saying they won’t be accomplices.


Washington Examiner: A talk with D.C.’s health exchange board

A talk with D.C.’s health exchange board

November 18, 2012 | 1:03 pm

BERLIN, GERMANY – SEPTEMBER 05: A doctor checks a patient’s muscles on September 5, 2012 in Berlin, Germany. Doctors in the country are demanding higher payments from health insurance companies (Krankenkassen). Over 20 doctors’ associations are expected to hold a vote this week over possible strikes and temporary closings of their practices if assurances that a requested additional annual increase of 3.5 billion euros (4,390,475,550 USD) in payments are not provided. The Kassenaerztlichen Bundesvereinigung (KBV), the National Association of Statutory Health Insurance Physicians, unexpectedly broke off talks with the health insurance companies on Monday. (Photo by Adam Berry/Getty Images)

Philip Klein

Senior Editorial Writer

The Washington Examiner


As Washington, D.C. went about creating its health insurance exchange to comply with President Obama’s national health care law, they had to deal with a unique problem. Given its relatively low population and already generous Medicaid program, officials determined there weren’t enough uninsured residents in the city to make a new exchange viable without more drastic action. So, they have taken the step of forcing all individuals, and businesses with between two and 50 employees, into the exchange. The idea is that by 2014, the Obamacare exchange will be the sole market to purchase health insurance in the District for individuals and small businesses whose plans aren’t “grandfathered in.” By conscripting these individuals and businesses, officials hope to meet the critical mass of participants they believe are needed to make the exchange viable (roughly, at least 100,000 people).

In a meeting with the Washington Examiner on Tuesday, members of the D.C. Health Benefits Exchange Authority tried to argue that their aim was to make the market function better.

“We are trying to find out the best way that we can implement this with the businesses so that there is minimum disruption in the marketplace as we implement this law,” the board’s chairman, Mohammad Akhter, said. “We looked at this not as a government venture, but as an independent venture…We want it to be ultimately self-sustainable to be able to do the work we need to do serving the small business community and uninsured people.”

Yet on top of taking the step of forcing individuals and small businesses into the exchanges, the board will be tasked, within the confines of Obamacare, with designing the health insurance policies that will be offered on those exchanges.

“We decided, generally speaking, to take a passive approach to insurance offerings in the regulatory sense, which means we’re not going to dictate detailed specifics for plan offerings,” vice chairman Henry Aaron insisted. Yet he added, “We do have a responsibility for deciding what is a qualifying health care plan. We have taken no decisions yet on that.”

Specifically, the board has not yet determined whether high-deductible health care plans with lower monthly premiums – plans that would make sense for younger and healthier beneficiaries – will be allowed in the District.

“We have not yet faced the question of what, if any, restrictions would limit the offering of a high-deductible plan within the exchange,” Aaron said. “I cannot answer that because I don’t know where we’re going on that. We haven’t received the staff work, we haven’t even begun to discuss it within the insurance working committee, and it hasn’t gone to the full board.”

Aaron conceded that younger residents and some small businesses could be subjected to higher premiums as a result of the law.

“I have always said when looking at this bill, that if I were a young person, I can see elements of this bill that I wouldn’t like in the short run,” Aaron said.

He also said that, “some companies are going to face higher premiums…If I employ a bunch of 25 year-old programmers and I’m in a large pool that includes a large company that hires a bunch of 55 year-old plumbers as well, then things are going to average out in that pool and there will be shifts in premiums and some companies will pay higher premiums as long as they’re not grandfathered.”

One of the main ideas of the health care law and related regulations is to force younger and healthier people into the insurance market to help subsidize older and sicker Americans who currently have difficulty finding insurance. But Aaron argues that even if they pay more in the short-term, younger people will be better off as they eventually grow older and rack up higher medical expenses.

“I think in the end, people are going to have more effective choice than they do today for a simple reason,” Aaron said. “The market for health insurance is going to be very significantly expanded in the District, the rules are going to be transparent, and it’s going to become a much more attractive place for insurance companies to enter than it has been to date. As things now stand, there’s one very dominant insurer and there are a number of smaller ones. We think it is likely there is going to be more competition among a variety of health insurers and we think that is good for everybody.”

Akhter said that D.C. has met every federal deadline and expects to continue doing so, but conceded that the time pressures have made it difficult for them to fully explore all possible methods of complying with the law. Exchanges will have to be ready to accept enrollees by next October.

“If you look at the whole implementation of the Affordable Care Act, the time pressure is brutal frankly,” Akhter said. “Things have to be done so fast and quick that there is not enough time to go through the whole litany of things that one could.”

He later added, “There’s no doubt that if there was better timing this thing could have been done better. There would have been a lot more consultation, a lot more discussion, a lot more debate. But the reality is this is the way the timing is presented. So, we have to run with what the deadlines are to meet the deadlines.”

One of the big challenges is that the federal government is going to have to create a massive data system that compiles Americans’ incomes to determine their eligibility to receive subsidies to purchase insurance on the exchanges. Those data have to be able to interact with multiple federal agencies and be fed into state systems.

“We have to set up the largest data system the District is ever going to have that’s going to determine eligibility,” Akhter said.

He went on to explain, “I don’t know how well these things will work. So we need to have flexibility. I’m working on the assumption that everything will go smoothly and we’ll be ready to go, but recognizing that there could be some bumps along the way, some flexibility would need to be there.” Based on the fact that the Obama administration has already extended some deadlines, he said he’s hopeful there will be that flexibility.

Under the law, states have the option of either designing their own exchanges, or allowing the federal government to step in. So far, at least 15 states (with predominantly Republican governors) have decided to default to let the Obama administration do the work, while 16 states plus the District have decided to do it themselves, according to a compilation by the Kaiser Family Foundation. Six states are planning a joint exchange, and the rest are still undecided.

Aaron said it remains to be seen who will do a better job.

“I don’t know how well the feds are going to do and the jury is out on how well the states are going to do,” he said. “I could well imagine a situation in which the states screw up and the feds do the job well. And I could also imagine a situation that’s just the reverse.”

WSJ Op-Ed — Capretta and Levin: Why ObamaCare Is Still No Sure Thing

Capretta and Levin: Why ObamaCare Is Still No Sure Thing

The majority of state governors are Republicans, and they have the power to disarm the health-care law.


Champions of ObamaCare want Americans to believe that the president’s re-election ended the battle over the law. It did no such thing. The Patient Protection and Affordable Care Act won’t be fully repealed while Barack Obama is in office, but the administration is heavily dependent on the states for its implementation.

Republicans will hold 30 governorships starting in January, and at last week’s meeting of the Republican Governors Association they made it clear that they remain highly critical of the health law. Some Republican governors—including incoming RGA Chairman Bobby Jindal of Louisiana, Ohio’s John Kasich, Wisconsin’s Scott Walker and Maine’s Paul LePage—have already said they won’t do the federal government’s bidding. Several Democratic governors, including Missouri’s Jay Nixon and West Virginia’s Earl Ray Tomblin, have also expressed serious concerns.

Talk of the law’s inevitability is intended to pressure these governors into implementing it on the administration’s behalf. But states still have two key choices to make that together will put them in the driver’s seat: whether to create state health-insurance exchanges, and whether to expand Medicaid. They should say "no" to both.

At its core, ObamaCare is a massive entitlement expansion. Between vastly increased Medicaid eligibility and new premium subsidies, it is expected to bring 30 million more people onto the federal government’s entitlement rolls. The law anticipates that the states will take on the burden of implementing the expansions, but states can opt out of both.

Running the exchanges would be an administrative nightmare for states, requiring a complicated set of rules, mandates, databases and interfaces to establish eligibility, funnel subsidies, and facilitate purchases. All of this would have to take place under broad and often incoherent statutory requirements and federal regulations that have yet to be written.

Associated Press

They are on opposite sides of ObamaCare, but President Obama and Louisiana Gov. Bobby Jindal met in September in LaPlace, La., for a briefing regarding Hurricane Isaac.

The exchanges would create unsustainable pressures on each state’s insurance market, treating similarly situated people differently by providing far greater subsidies for those in the exchanges than those in employer plans—yielding perverse incentives that distort consumer and employer decisions and increase costs.

States would endure all this simply to become functionaries of the federal government. The idea that creating state exchanges would give states control over their insurance markets is a fantasy. The states would be enforcing a federal law and federal regulations, with very little room for independent judgment.

Governors know this. A group of them has already indicated that they will not build the exchanges, and several more seemed ready to opt out as the administration’s deadline for state decisions approached on Nov. 16. Predictably, Health and Human Services Secretary Kathleen Sebelius tried to head them off by extending the deadline to Dec. 14. She will try to use the extra month to twist governors’ arms. They should resist.

By declining to build exchanges, the states would pass the burden and costs of the exchanges to the administration that sought this law. And it is far from clear that the administration could operate the exchanges on its own.

Congress didn’t allocate money for administering federal exchanges, and the law as written seems to prohibit federally run exchanges from providing subsidies to individuals. The administration insists that it can provide those subsidies anyway. But if the courts read the plain words of the statute, then federal exchanges couldn’t really function.

Thus states that refuse to create their own exchanges would effectively be repealing a large part of the law—sparing their citizens from the job-killing employer mandate and from assaults on their religious liberty. In some cases people would even be spared from the individual mandate to buy coverage, since in the absence of exchange subsidies more families would qualify for exemptions from the mandate.

The Medicaid expansion, meanwhile, would throw millions of additional Americans into a system that is already bankrupting state governments and increasing costs in the private-insurance market. Medicaid’s payments for services are so low that many existing beneficiaries have trouble finding physicians and other health-care providers who will accept them as patients. Enrolling more people without reform will push the system to the point of collapse.

In refusing the Medicaid expansion, governors should notify Washington that doing so means freeing themselves of ObamaCare’s "Maintenance of Effort" requirements. These would prohibit states participating in the Medicaid expansion from reforming their Medicaid systems to reduce costs.

Instead of following the Obama administration’s plan, states should seek real reform. For example, they should demand that Washington transform the federal portion of Medicaid for non-disabled and non-elderly beneficiaries into a uniform block grant, with state discretion over eligibility and benefits. The goal should be to turn Medicaid into a premium-assistance program rather than government-run insurance. Medicaid could then be used to help people enroll in mainstream insurance plans. This is the way to help the low-income uninsured get the same kind of coverage as other Americans.

President Obama won re-election and Democrats maintained control of the Senate this month, but the states hold the future of ObamaCare in their hands. Knowing the harm the law would do to their citizens, to the economy and to American health care, governors should refuse to become its enablers.

Mr. Capretta is a fellow at the Ethics and Public Policy Center and a visiting fellow at the American Enterprise Institute. Mr. Levin is a fellow at the EPPC and editor of National Affairs.

Obamacare: The Law of the Land – DC Leads States In Roll Out

Obamacare: The Law of the Land – DC Leads States In Roll Out

. Mohammad Ahkter, MD, Chair, DC Health Benefit Exchange Authority

Following President Barack Obama’s re-election last week, House Speaker John Boehner (R-Ohio) told ABC News that the president’s signature Patient Protection and Affordable Care Act (aka Obamacare) is now the "law of the land." Boehner later walked back that resignation, tweeting: "Our goal remains #fullrepeal." GOP 2012 presidential contender Mitt Romney said if he were elected he would “repeal Obamacare on day one.” With that settled, the States and the District of Columbia are ramping up for full implementation of Obamacare.

“We’d likely be doing a lot of unfortunate back tracking right now [if President Obama had not won the election],” said a smiling Dr. Mohammad Akhter, Chairman of the Executive Board of the DC’s Health Benefit Exchange Authority (HBX) in an exclusive to NuVote Reach/

“Well, the president won the election, and in this context, that is important. But I can say to you, we had already made very good progress on our future healthcare plans for the District,” he added.

Talk about going all in, starting last summer, Dr. Akhter took a one-year unpaid leave of absence as Director of the DC Department of Health (DOH) to serve on the HBX board charged with guiding implementation of a crucial part of Obamacare – state-level insurance exchanges that will help individuals and small businesses purchase health insurance coverage.

“We are ahead of the rest of the country in developing our plans, with the exception of Massachusetts [with
Romneycare] which has had an established system for some time.

We are very pleased with where we are,” said Akhter.

DC and 13 states gambled a bit in proceeding to meet the Obamacare mandates before the election, while other states were up against a November 16 deadline – now extended to mid December due to the post-election catch-up maneuvering of a number of states – to submit plans to the federal government to set up their exchanges or let the federal government establish one for them. Louisiana and Wisconsin are examples of states opting to let the federal government set up their states’ exchanges – both happen to have Republican governors.

“We fully expect our plan will be approved,” he added.

DC was actually somewhat insulated from the results of the election. It has already passed legislation – the Health Benefit Exchange Establishment Act of 2011 – establishing the health exchange and has received $80 million in federal funding to proceed.

“Implementing the Affordable Care Act is one of my top priorities,” said DC Mayor Vincent Gray at a June 2012 press conference.

The DC plan includes a mandate that has drawn some controversy. All health-insurance plans sold in the city for 50 members or fewer must be purchased through the exchange.

A letter signed by a coalition of more than 150 DC-based small businesses and associations said the exchange mandate betrayed “President Obama’s repeated assurances that, ‘If you like your health plan . . . you will be able to keep your health care plan. Period,’ said Obama in championing the plan on the campaign trail.

Small businesses with less than 50 employees are not required to provide insurance for their employees under the plan and all small businesses can keep their existing insurance plans if they were in place before the health care law passed in 2010, but they must work through the exchange if they switch their plans or make significant changes in coverage.

A report prepared in 2011 for the DC Department of Health Care Finance said that in 2010 about 19,000 DC residents pur­chased individual health-insurance plans. The report also cited federal data from 2010 showing 7,300 District employers offered plans to 50 or fewer workers — about 125,000 employees in all.

“For the exchange to be sustainable, it has to have approximately 100,000 people,” Akhter said earlier.

“If the exchange isn’t sustainable in the long haul, if it does not have enough people, then we are wasting our time and our effort,” he added.

The HBX Board this week met another plan mandate with the announcement of the appointment of nine DC residents to its newly established Standing Advisory Board, from “…which the Board shall solicit recommendations, and consult on insurance standards, covered benefits, premiums, plan, technology system development, and any other policy or operational issues within the executive board’s discretion,” as stated in the establishing DC law.

An HBX press release Wednesday provided brief bios of members of the new advisory board:

“Karen Johnson has been with United Healthcare since 2007 and is currently the Executive Director of the United Healthcare Community Plan. Ms. Johnson is also a registered nurse and attorney, and has worked in variety of healthcare settings, gaining experience on both the payer and provider side of the Health care continuum. Ms. Johnson was chosen to satisfy category 4, commercial sector health plans, and was appointed for a 2-year term.

Barry Lewis has been an anesthesiologist at Washington Hospital Center since 2003, and was previously with Johns Hopkins and Sibley Hospitals. Dr. Lewis also serves as a Medical Board Executive for the D.C. Medical Society and as a member of the D.C. Health Information Exchange Board. He was chosen to satisfy category 1, health care professionals, and was appointed for a 2-year term.

Dania Palanker has been the Senior Health Policy Advisor for National Women’s Law Center since 2011. Ms. Palanker has been tracking the implementation of ACA and the establishment of health exchanges in particular on a professional basis since the passage of the legislation. She was chosen to satisfy category 3, demographic-specific advocacy groups, and was appointed for a 2-year term.

Billy MacCartee has been the President of MacCartee Medical Management, Inc. (First Financial Group) since 1996. As an insurance broker, Mr. MacCartee has over 200 corporate clients in the mid-Atlantic area. Mr. MacCartee was chosen to satisfy the mandatory requirement of having a broker (category 6) on the Standing Advisory Board and was appointed for a 3-year term.

Jill Thorpe is the general counsel for AFrame Digital, a health IT company providing remote monitoring solutions for seniors and patients with chronic conditions in home, senior living, and long term care settings. Through her profession, Ms. Thorpe has gained familiarity with the ACA generally and in particular with efforts to promote innovative models of care and payment. Ms. Thorpe was chosen to satisfy categories 2 and 9, health insurance and Exchange consumers, and was appointed for a 3-year term.

Kevin Dougherty has been an employee at the National Multiple Sclerosis Society, National Capital Chapter for over 19 years, serving as a Counselor, Care Manager, and Clinical Supervisor. Mr. Dougherty currently serves as Vice President of Programs and Services at the Chapter and his responsibilities include overseeing the development, delivery and evaluation of programs and services. Mr. Dougherty was chosen to satisfy category 3, disease-specific groups, and was appointed for a 3-year term.

Stephen Jefferson is a Stage-4 Hodgkin’s Lymphoma survivor, an active member and volunteer of the DC Cancer Consortium, and an active member of the Ward 8 Health Council. Mr. Jefferson is particularly interested in addressing healthcare disparities and the importance of primary care early detection and treatment compliant issues. Mr. Jefferson was chosen to satisfy categories 2 and 9, health insurance and Exchange consumers, and was appointed for a 4-year term.

Claire McAndrew is a Senior Health Policy Analyst at Families USA, a national non-profit, non-partisan organization dedicated to the achievement of high quality, affordable coverage for all. In that position, Ms. McAndrew tracks exchange establishment efforts nationwide and manages advocacy work on exchanges, both as it pertains to federal policymaking and to provide technical assistance to state-based advocacy organizations. Ms. McAndrew was chosen to satisfy category 7, health care consumer interest advocacy, and was appointed for a 4-year term.

Chris Gardiner is the founder of GKA, P.C., a minority-owned certified public accounting and management consulting firm domiciled in the District of Columbia and has served as its chairman for the past 25 years. Mr. Gardiner is currently a member of the Board of Directors of United Medical Center, the District of Columbia’s not-for-profit hospital corporation, and previously served on the Board of Directors of Howard University Hospital. Mr. Gardiner was chosen to satisfy categories 2 and 9, health insurance and Exchange consumers, and was appointed for a 4-year term as well as to serve as chairman of the Advisory Board.”

Obama Administration Extends Deadline For State Exchanges –Again

Obama Administration Extends Deadline For State Exchanges –Again

By Phil Galewitz

KHN Staff Writer

Nov 15, 2012

Bowing to a request from Republican governors, the Obama administration announced late Thursday that it would give states more time to decide whether to build online health insurance markets that will help millions of people buy coverage starting next fall.

Health and Human Services Secretary Kathleen Sebelius pushed back the deadline until Dec. 14 for states to submit letters of intent to build the state-based markets, called exchanges. The original deadline had been Friday, Nov. 16.

"We are committed to providing states with the flexibility, resources and time they need to deliver the benefits of the health care law to the American people," Sebelius wrote Thursday to the Republican Governors Association (RGA). "We will continue to work directly with individual states to address their particular questions and concerns."

The letter was in response to an RGA request Wednesday to extend the deadlines until after HHS publishes rules detailing how the exchanges would work. A slew of regulations are expected to be published in the next few weeks.

The markets are a key element of the health care law — where millions of individuals are expected to shop for coverage and find out if they are eligible for government subsidies or Medicaid, the state-federal health insurance program for the poor. The law requires the federal government to build and operate the markets if states do not.

In a statement last night, the RGA thanked the agency for its response, but it was unclear whether the additional time would change anyone’s mind. As of Thursday, only 17 states and the District of Columbia had committed to building their own exchanges — far fewer than envisioned by the administration when the law was passed in 2010.

“We appreciate the administration’s acknowledgement that not enough information has been provided to the governors and hope this is a signal that the White House intends to engage directly with the governors on the substantial policy issues that remain unresolved and are open to real reform,” said RGA spokesman Mike Schrimpf.

A week ago, Sebelius had given states until Dec. 14 to submit detailed plans to build the state-based markets, and until Feb. 15 to submit plans to partner with the federal government.

U.S. Extends a Deadline for States on Coverage

November 9, 2012

U.S. Extends a Deadline for States on Coverage


WASHINGTON — With many states lagging far behind schedule, the Obama administration said Friday that it would extend the deadline for them to submit plans for health insurance exchanges, the online markets where millions of Americans are expected to obtain private coverage subsidized by the federal government.

The original Nov. 16 deadline will be extended to Dec. 14 — and in some cases to Feb. 15, the administration said.

The Congressional Budget Office predicts that 25 million people will obtain coverage through the new online shopping malls known as insurance exchanges. Most of them will receive federal subsidies averaging more than $5,000 a year per person to help them pay premiums.

Every state is supposed to have an exchange by Jan. 1, 2014, when the federal government will require most Americans to have insurance. Many states delayed work on the exchanges to see the outcome of a Supreme Court case challenging the health care law, then waited to see if President Obama would be re-elected.

If a state wants to run its own exchange, its governor still must submit a declaration of intent — generally a brief letter of one or two pages — by Nov. 16. But states will have more time to submit the detailed applications required by federal officials.

The White House has repeatedly said that states were making excellent progress toward creation of the exchanges, even as Republican governors and state legislators expressed ambivalence or outright opposition. In addition, state officials who want to establish exchanges said they were having difficulty because Mr. Obama had yet to issue crucial regulations and guidance.

In a letter to governors on Friday, Kathleen Sebelius, the secretary of health and human services, said that many states had asked for “additional time” to submit applications indicating whether they wanted to run their own exchanges or help the federal government run exchanges in their states.

Under the Affordable Care Act, the federal government will run the exchanges in any states that are unable or unwilling to do so. Fewer than half the states have indicated that they will set up their own exchanges.

If states want to run their own exchanges, Ms. Sebelius said, they will have until Dec. 14 to submit applications, or blueprints. And if states want to run exchanges in partnership with the federal government, she said, they will have until Feb. 15 to file applications.

Ms. Sebelius said the new timetable would not defer the dream of affordable insurance for millions of Americans.

“Consumers in all 50 states and the District of Columbia will have access to insurance through these new marketplaces on Jan. 1, 2014, as scheduled, with no delays,” Ms. Sebelius told governors. “This administration is committed to providing significant flexibility for building a marketplace that best meets your state’s needs.”

Senator Orrin G. Hatch of Utah, the senior Republican on the Senate Finance Committee, said the change in the deadline was “no surprise” because the White House had not given states enough information or guidance to make decisions.

“Frankly,” Mr. Hatch said, “the fact that the exchanges are such a mess is pretty emblematic of how flawed the president’s health law is — with states having to bear the brunt.”

Representative Charles Boustany Jr. of Louisiana, a spokesman for House Republicans on health policy, said he doubted that extending the deadline would make the law any more workable.

Even in states where governors want to establish insurance exchanges, they need legal authority to do so, and Republican legislators have balked in some states.

Federal officials hope that fierce competition among insurers offering health plans in the exchanges will drive down premiums.

Joel S. Ario, a former director of the federal office for insurance exchanges who now advises states as a consultant at Manatt Health Solutions, said: “The administration’s decision is a good move. It increases the chances that more states will opt for a partnership exchange, rather than default to a federal exchange.”

An administration official said that Mr. Obama was on schedule in carrying out the law, and that starting in October, Americans will be able to enroll in health plans for coverage starting in January 2014.

Obama win seen as victory for healthcare reform

Obama win seen as victory for healthcare reform

By Jessica Zigmond and Rich Daly, Modern Healthcare

Posted: November 7, 2012 – 1:30 am ET

Tags: Barack Obama, Healthcare Reform, Medicare, Mitt Romney

President Barack Obama’s victory serves as a vindication for the Patient Protection and Affordable Care Act, industry experts said soon after the president won re-election Tuesday.

The election also produced a Congress that will continue the existing split in control between the two parties. Democrats were projected by the Associated Press to maintain their Senate majority and the Republicans to maintain control of the House of Representatives.

While Republican lawmakers on Capitol Hill might continue trying to chip away at the law in pieces, they won’t be successful in overturning the statute in its entirety, said Eric Zimmerman, a partner with McDermott Will and Emery in Washington.

“Any provider standing on the sidelines? They can now take their head out of the sand,” Zimmerman said. “It’s here to stay and it’s time to get on board and take on strategies that can position hospitals for success in this brave new world.”

Tom Miller, a resident fellow at the conservative American Enterprise Institute, said any repeal effort is at least temporarily “blocked” in Congress. But the law may regain political significance for Republicans if there are major implementation problems with its major provisions in the run-up to the 2014 mid-term elections.

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Additionally, the “status quo” results also may embolden Republicans to continue their efforts to slow the implementation and block funding for the law, said Julius Hobson, a former lobbyist with the American Medical Association who now serves as a senior policy adviser at Polsinelli and Shugart. However, the ultimate effect of defunding efforts will be mitigated by most of the law’s major provisions having already received approval for the necessary funds as part of its enactment.

The election results also are likely to produce a temporary delay in a range of scheduled healthcare spending cuts, including a 27% cut in Medicare physician payments and a 2% cut to all Medicare providers, Hobson and Miller said. However, they split over whether the election ultimately places more pressure on the president or House Republicans to compromise for a “grand bargain” next year that includes a resolution of those healthcare cuts.

Obama “is not going to face re-election but he has to govern in office for at least two years and it would accelerate his lame duck status,” Miller said about economic problems produced by political brinksmanship. “He cannot afford even a modest recession.”

Meanwhile, McDermott Will and Emery’s Zimmerman said providers should brace themselves for more reimbursement cuts.

“The fiscal cliff represents a mountain of trouble for Medicare and Medicaid and any interest groups dependent on those programs,” Zimmerman said. “It’s going to be a difficult year as the president and Congress deal with the Bush era tax cuts, sequestration and the deficit,” he continued, adding that if lawmakers agree to a grand bargain that resolves each of these issues, providers could see cuts of historic proportions. “Medicare and Medicaid represent 25% of the federal budget. You cannot deal with the deficit in a meaningful way without dealing with those programs.”