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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. to mention the rest of Molly's experience- she served as Communications Director for the Indianapolis Department of Public Works and also did communications for the state. She's incredibly qualified for this role and has a real love for Indianapolis and Indiana. Best of luck to her!

  2. Shall we not demand the same scrutiny for law schools, med schools, heaven forbid, business schools, etc.? How many law school grads are servers? How many business start ups fail and how many business grads get low paying jobs because there are so few high paying positions available? Why does our legislature continue to demean public schools and give taxpayer dollars to charters and private schools, ($171 million last year), rather than investing in our community schools? We are on a course of disaster regarding our public school attitudes unless we change our thinking in a short time.

  3. I agree with the other reader's comment about the chunky tomato soup. I found myself wanting a breadstick to dip into it. It tasted more like a marinara sauce; I couldn't eat it as a soup. In general, I liked the place... but doubt that I'll frequent it once the novelty wears off.

  4. The Indiana toll road used to have some of the cleanest bathrooms you could find on the road. After the lease they went downhill quickly. While not the grossest you'll see, they hover a bit below average. Am not sure if this is indicative of the entire deal or merely a portion of it. But the goals of anyone taking over the lease will always be at odds. The fewer repairs they make, the more money they earn since they have a virtual monopoly on travel from Cleveland to Chicago. So they only comply to satisfy the rules. It's hard to hand public works over to private enterprise. The incentives are misaligned. In true competition, you'd have multiple roads, each build by different companies motivated to make theirs more attractive. Working to attract customers is very different than working to maximize profit on people who have no choice but to choose your road. Of course, we all know two roads would be even more ridiculous.

  5. The State is in a perfect position. The consortium overpaid for leasing the toll road. Good for the State. The money they paid is being used across the State to upgrade roads and bridges and employ people at at time most of the country is scrambling to fund basic repairs. Good for the State. Indiana taxpayers are no longer subsidizing the toll roads to the tune of millions a year as we had for the last 20 years because the legislature did not have the guts to raise tolls. Good for the State. If the consortium fails, they either find another operator, acceptable to the State, to buy them out or the road gets turned back over to the State and we keep the Billions. Good for the State. Pat Bauer is no longer the Majority or Minority Leader of the House. Good for the State. Anyway you look at this, the State received billions of dollars for an assett the taxpayers were subsidizing, the State does not have to pay to maintain the road for 70 years. I am having trouble seeing the downside.

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