The Patient Protection and Affordable Care Act (PPACA) mandated that online health insurance exchanges be created and operating in all states by October 1, 2013, so that individuals and small groups can enroll in plans in advance of a January 1, 2014 start date. In states that do not create their own exchanges, the federal government will be required to implement federally operated exchanges. Not all states will be ready to operate their own exchanges by the deadline, and politicians in some states have refused to take the necessary steps to prepare for them.

On July 27, Michael Hash, the interim director of the Center for Consumer Information and Insurance Oversight (CCIIO), stated that the Department of Health and Human Services (HHS) is “on track to set up a federally facilitated exchange in those states that aren’t certified as of January 2013.” Speaking at a meeting sponsored by the Alliance for Health Reform, Hash added, “Our strong preference is for states to establish a state-based exchange, giving them the maximum amount of flexibility to tailor their exchanges to the needs of their own marketplaces.” However, where necessary, HHS will assume the administrative tasks required by PPACA, including plan management, eligibility and enrollment functions, and financial management responsibilities, for health plans to be sold in the state exchanges.

States that intend to operate their own exchanges, alone or in partnership with HHS, must notify HHS of their intentions by November 16. In states that do not do so, HHS will operate federal exchanges. As we reported two weeks ago, 34 states and the District of Columbia have already received a total of about $850 million in federal grants to be applied toward building exchanges. States that have not yet applied for grants may continue to do so through 2014.

According to Hash, HHS will soon be releasing a proposed rule on the “essential health benefits” that must be offered by insurance plans sold on all exchanges, as well as further operational guidance on the federally run exchanges.


With Congress’s annual August recess to begin at the end of this week and run until the week of September 10, no legislative developments are expected in the near term. Most lawmakers will return to their home districts and will have the opportunity to meet with their constituents, including those involved in the healthcare field. Taking advantage of the perceived opportunity, the American Medical Association will conduct a “grassroots training webinar” this week to “prepare physicians to interact effectively with their lawmakers” during the recess.

Upon Congress’s return, most observers expect the legislative process to remain slow leading up to the presidential election in November.