The Corner

Sebelius Waives Health-Care Exchange Deadline in Attempt to Woo States

The New York Times reports today that the Obama administration has decided to waive the deadline for states to opt into administering exchanges under Obamacare in the hopes that reluctant states will get on board:

Under the law, the secretary of health and human services was supposed to determine “on or before Jan. 1, 2013,” whether states were prepared to operate the online markets, known as insurance exchanges.

But the secretary, Kathleen Sebelius, working with the White House, said she would waive or extend the deadline for any states that expressed interest in creating their own exchanges or regulating insurance sold through a federal exchange.

A political benefit of this strategy is that it allows the administration to keep working with even the most recalcitrant states. Administration officials said they were trying to persuade such states to share the work of running an exchange, supervising health plans and assisting consumers.

The exchanges are a crucial element of President Obama’s health care law. Every state is supposed to have one by October, and most Americans will be required to have coverage, starting in January 2014. The federal government will run the exchange in any state that is unwilling or unable to do so. It now appears that federal officials will have the primary responsibility for running exchanges in at least half the states — far more than expected when the law was passed in 2010.

So far, 17 states have received “conditional” approval of their proposed state-run exchanges, including Utah, which has expressed reservations about enforcing the individual mandate and implementing other provisions of the law. The Times notes that “federal officials granted conditional approval to some states even though state legislators had not provided clear legal authority or money to run an exchange.”

Secretary Sebelius is also holding out hope that some other states will agree to run “partnership exchanges” with the federal government and is giving them until February 15 to decide. American Medical News reports that Arkansas and Delaware have signed up for this hybrid model, which essentially lets the states maintain some regulatory control while the federal government assumes the responsibility and much of the costs of administering the exchange.

The Times also quotes a former Obama administration official, who notes that none of these arrangements were envisioned in the law as written: “There is no such thing as ‘conditional approval’ in the statute, nor is there a ‘partnership exchange’ in the statute.”

It remains to be seen how successful this strategy will be in co-opting the states. NR’s editors last month urged them to resist.

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