Health Care Exchanges: National Governors Association Advises Obama Administration

The nation's governors sent the Obama Administration recommendations Thursday morning regarding the implementation of health care exchanges as a federal-state partnership.

The National Governors Association wrote a letter to Health and Human Services Secretary Kathleen Sebelius full of proposals that they say would allow for the states to work with the federal government to set up jointly managed exchanges, while at the same time retaining autonomy for the states in future decisions. The letter said that many of the states which are considering the partnership model are doing so for the short term benefits of having federal management while states get programs up and running or are compelled by the option to divide up duties between states and the federal government. The letter was sent by NGA Health and Human Services Committee Chairman Iowa Gov. Terry Branstad (R) and Vice Chairman Illinois Gov. Pat Quinn (D).

HHS proposed the partnership option to states in September as a way to help get the programs off the ground. As part of the federal health care reform law, the exchanges need to be in place by 2014.

One of the concerns addressed by the governors was the investments states have made in other health care programs, which the NGA feels the federal government would be taking over as part of the partnership proposed by Sebelius.

"Under the proposed partnership models, states would be required to cede many operations that have been traditionally handled at the state level -- such as Medicaid eligibility -- regardless of whether they implement a state-based exchange, implement a state-federal partnership model or turn over responsibility for the exchange entirely to the federal government," the NGA wrote. "States have invested taxpayer resources in state-based eligibility systems since the Medicaid program began and want to avoid duplication of effort."

Branstad and Quinn also wrote that state governments are concerned that entering into a partnership would prevent states from being able to take full control of the state exchanges at a future date. The governors wrote that states are still undecided on a final course of action due to uncertainty over final rules and funding.

Among the recommendations from Branstad and Quinn are to have states formally assign functions to the federal government that have been handled primarily on the federal level.

"To best facilitate a state-federal partnership, we suggest the federal government offer states the option of assigning functions where states have little or no current operational role such as: determination of eligibility and appeals for federal tax credits and subsidies; facilitation of advance payment of premium tax credits by the Department of the Treasury to insurers; enforcement of the individual responsibility provisions; and reporting of user and employer data to the Department of the Treasury," the governors wrote.

Branstad and Quinn also proposed having the federal government work with the states in the partnerships to provide assistance on information technology issues, including software development.

The letter comes as state governments continue to grapple with the decisions over setting up the exchanges, including over a dozen Republican-led states rejecting the concept. Ohio voters are voting next week on a constitutional amendment to block the federal health law from being implemented in the state, and North Dakota lawmakers are going into special session next week to tackle a host of issues, including health care exchanges.