HHS Will Waive, Extend Deadline for Health Insurance Exchanges... Again

by Kristen De Pena | February 1, 2013

Working with the White House, Health and Human Services Secretary (HHS), Kathleen Sebelius, announced yet another extension of the deadline for states looking to implement and regulate their own health insurance exchange or partner with the federal government--to February 15, 2013... and likely, beyond. 

Under the Patient Protection Affordable Care Act (PPACA), HHS Secrtary Sebelius was required to determine "on or before January 1, 2013" whether each state was prepared to run its own health exchange independently. A health insurance exchange (HIX) is a set of state-regulated healthcare plans whereby individuals can purchase health insurance eligible for federal subsidies. Proponents of these exchanges argue that they allow consumers to purchase more cost-effective insurance within a competitive market. The exchanges are not themselves providers, but better regulate the insurance companies that are able to participate in the exchanges, and receive federal subsidies for certain services. Opponents counter that implementation and maintenace of the exchanges will cost states an extraordinary amount of money and many states already strapped for cash are unwilling to take on the financial burden. Additionally, some critics suggest that the exchanges infringe on state sovereignty.

If a state is unwilling or unable to establish an exchange, HHS assumes primary responsibility for operating a federally based exchange in the state. On March 27, 2012, HHS published its final rule on the establishment of exchanged and qualified health plans, and exchange functions in the individual market. The final rule implements exchanges consistent with the Patient Protection Affordable Care Act (PPACA) of 2010 by providing for competitive marketplaces for individuals and small employers to directly compare available private insurance options with those options provided by the federal government.

Why so many deadline extensions?

Initially, states dragged their feet while they waited on the highly anticipated Supreme Court ruling on the constitutionality of PPACA. Then the states dragged their feet in anticipation of the Presidential election outcome. Once HHS recognized that state were not going to meet the initial November 16, 2012 deadline, they extended it to December 14, 2012. Again, the states failed to respond timely. Now, states have until February 15, 2013 to to file applications to operate exchanges "in partnership with the federal government."

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. 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, according to The New York Times.

So far, just 18 states and the District of Columbia are approved to run their own exchanges, and 2 states have conditional approval.