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States gain delay on deadline for health-law marketplaces

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States received an extra month from the Obama administration to decide whether to build online marketplaces for medical insurance after Republican governors pressed their resistance to the president’s health-care law.

Extending a deadline set for Friday, U.S. Secretary of Health and Human Services Kathleen Sebelius said states can wait until Dec. 14 to declare whether they’ll build their own insurance exchanges. States that opt out can join a partnership with the federal government or let the U.S. run the markets.

About 9 million Americans are expected to enroll in exchange plans in 2014, rising to 26 million by 2018, according to the Congressional Budget Office. Restrictions in the new markets are expected to crimp profits for insurers like UnitedHealth Group Inc. and WellPoint Inc., so a delay may help the industry, said Ana Gupte, a Sanford C. Bernstein & Co. analyst in New York. Ultimately, insurers would prefer state-run exchanges, she said.

UnitedHealth, the biggest U.S. health insurer, is based in Minnetonka, Minn., and WellPoint, the No. 2 plan, in Indianapolis.

“The industry would prefer the more decentralized approach,” Gupte said. “The more states that rely on the federal fall-back, the less easy it is for the industry to secure any changes through lobbying. They’re much better at lobbying at the state level.”

Exchange regulators will decide which health plans are allowed to sell in the new marketplaces, whether they have to meet standards for coverage already set by the 2010 Affordable Care Act and other issues likely to have a direct impact on profitability for companies, Gupte said. Some states that have gone ahead with their own systems, such as California, plan to negotiate premiums on behalf of consumers, while others will take a “more laissez-fair approach,” she said.

The marketplaces are required under the 2010 overhaul to help people who don’t get insurance from their employer comply with the law’s requirement that they have coverage. Exchanges must open for business by Oct. 1 next year. Thirteen states and the District of Columbia so far have said they will build their own exchanges.

Sebelius, in a letter Thursday to Republican Governors Robert McDonnell of Virginia and Bobby Jindal of Louisiana, said her department has “worked closely with governors from across the country to gather their input.”

Nonetheless, she said states would have an extra month to file a letter of intent. Even beyond that, states have until Feb. 15 to join a hybrid state-federal exchange and will have opportunities in future years to start their own markets, Sebelius said.

“States have and will continue to be partners in implementing the health care law, and we are committed to providing states with the flexibility, resources and time they need,” she wrote.

Republican governors have revolted against the law since President Barack Obama’s re-election, with McDonnell, Indiana's Mike Pence, Kansas’ Sam Brownback and Alabama’s Robert Bentley declaring their states wouldn’t create exchanges. Governors in Texas and South Carolina said Thursday they’ll opt out as well.

“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,” Jindal and McDonnell, the chairman of the Republican Governors Association, said in a Nov. 14 letter to Obama requesting a delay in the notification deadline.
 

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  1. Great article and post scripts by Mike L (Great addition to IBJ BTW). Bobby's stubborn as a mule, and doubt if he ever comes back to IU. But the love he would receive would be enormous. Hope he shows some time, but not counting on it.

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  4. Jim, your "misleading" numbers comment is spot on. This is the spin these posers are putting on it. News flash, fans: these guys lie. They are not publicly traded so no one holds them accountable for anything they say. The TV numbers are so miniscule to begin with any "increase" produces double digit "growth" numbers. It's ridiculous to think that anything these guys have done has awakened the marketplace. What have they done? Consolidate the season so they run more races on consecutive weekends? And this creates "momentum." Is that the same momentum you enjoy when you don't race between August and March? Keep in mind that you are running teams who barely make ends meet ragged over the summer to accomplish this brilliant strategy of avoiding the NFL while you run your season finale at midnight on the East Coast. But I should not obfuscate my own point: any "ratings increase" is exactly what Jim points to - the increased availability of NBC Sports in households. Look fans, I love the sport to but these posers are running it off a cliff. Miles wants to declare victory and then run for Mayor. I could go on and on but bottom line for God's sake don't believe a word they say. Note to Anthony - try doing just a little research instead of reporting what these pretenders say and then offering an "opinion" no more informed than the average fan.

  5. If he's finally planning to do the right thing and resign, why not do it before the election? Waiting until after means what - s special election at tax payer expense? Appointment (by whom?) thus robbing the voters of their chance to choose? Does he accrue some additional financial advantage to waiting, like extra pension payments? What's in it for him? That's the question that needs to be asked.

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