The Exchanges Won’t Be Ready in Time. And it Probably Won’t Matter.

As states race to implement health reform, California doesn’t want to settle for second.

“We don’t want to be a pace car state” when it comes to implementing health reform, state HHS Secretary Diana Dooley told Politico back in January 2011. “We want to be the lead car.”

It’s a metaphor that California leaders have returned to time and again. And to their credit, they’ve often succeeded.

While other states waffled, Golden State officials quickly embraced key Obamacare provisions like expanding Medicaid and creating insurance pools for individuals with pre-existing conditions.

At the same time, lawmakers crafted legislation intended to conform California’s health insurance plans to new standards under the Affordable Care Act.

And Covered California, the state’s health insurance exchange, also has drawn national attention for its speedy implementation. Among the 17 states that opted to run their own exchanges, California has “certainly [been] in the lead on getting their health plan information out … and getting the contracts signed,” Rachel Dolan, who monitors exchange activity for State Refor(u)m, a project of the National Academy of State Health Policy, said.

But the driving metaphor only extends so far.

“I don’t think it’s a race,” Dolan added, cautioning that each state might take unique approaches to exchange implementation — and objectively judging those individual strategies is impossible.

And a more essential issue might be getting lost, amid the growing number of questions over which state exchanges will be open for business on Oct. 1.

“Lots of people are asking about readiness,” said Caroline Pearson, who leads Avalere Health’s efforts to track health reform implementation. “But no one is asking about whether it matters.”

Where the States Stand on Readiness
The sprint to get the exchanges off the ground — which for some states didn’t really begin in earnest until after the Supreme Court’s June 2012 decision to uphold the ACA — has led to repeated delays and ongoing concerns.

Earlier this year, the Government Accountability Office found that states running their own exchanges were late on 44% of activities slated to be completed by the end of March 2013. (CMS also has encountered its own challenges and emerging delays with getting the federal exchanges off the ground.)

Dolan, Pearson and other experts who spoke with California Healthline reviewed the common implementation challenges — namely, that officials have been wrestling with their information technology systems — as well as which states have been especially savvy at hurdling them. And the Golden State repeatedly came up for praise.

“California has been ahead of the game all along, in terms of marketing and navigators,” Pearson said. “They’ve got a lot of resources, they seem to be well-organized.”

The exchange’s innovative tactics for promotion also stand out. Covered California “has done the Reddit chats, town halls,” Dolan noted. “In terms of grassroots, they’ve definitely been [strong].”

On the other side of the ledger, Idaho was identified as a state that’s lagged behind on exchange implementation. The June GAO report found that Idaho’s exchange still had 56 “key activities” left to complete as of May 13, 2013; in comparison, Covered California had 45 activities left to complete, and Maryland’s exchange had just 20. And Idaho officials recently announced that the state exchange’s launch might be delayed because of concerns over the security of a federal data hub.

(In a statement, a spokesperson for Idaho’s exchange stressed that the exchange will still be operational by the deadline.)

But Idaho isn’t alone in weighing delays. Officials at Cover Oregon, which has been among the fastest-moving exchanges for implementation, already announced that they will beta-test their IT system on Oct. 1 rather than roll it out to the public. Covered California officials also are weighing a “soft launch” of their online marketplace, Lewis Krauskopf reported for Reuters last month.

“If California’s talking about contingency planning, then we need to acknowledge that any number of state-run exchanges may not be fully operational by Oct. 1,” Pearson said.

Putting Delays in Perspective
And that’s why Pearson and others repeatedly returned to a common point: When it comes to the exchanges, in the long run it doesn’t matter if your state is second, sixth or 16th — for the most part.

“States are being strategic,” according to Dolan. “They know when they want to get people enrolled.”

And “keep in mind that people aren’t getting coverage on Oct. 1,” she added, noting that, “The most important thing that [states] can do now is get the word out” to start boosting interest and enrollment through the fall and winter.

Pearson pointed out that whether a policy is successful in the long run may not always make for the best short-term politics.

“How are you judging [success]?” she asks. “If by 2017, exchanges are successful marketplaces?” In that case, Pearson noted, whether a state hits all of its deadlines by Oct. 1, 2013, matters much less than needing some extra time to perfect the exchange’s operations.

But there’s a looming pressure: How Obamacare implementation is perceived, and if the exchanges are able to successfully offer affordable, accessible coverage, could possibly emerge as an issue in next year’s mid-term elections.

“In reality, we’re judging the political rhetoric for the 2014 election,” Pearson noted. And whether the exchanges can hit the White House’s public goal: getting seven million people enrolled by next March.

Pearson thinks that target is achievable — she noted that millions of chronically ill Americans who previously couldn’t obtain coverage will likely flock to the exchanges — and gets to the real metric worth tracking.

“Ultimately, getting people covered will be the marker of success,” she concludes.

Dan Diamond (@ddiamond) is Managing Editor of the Daily Briefing, a CaliforniaHealthline columnist, and a Forbes contributor. This  post originally appeared in California Healthline.

7 replies »

  1. According to The Act, if there is no state established exchange, there is no legal subsidy. No subsidy, no tax/penalty.

  2. Will the Federal Exchanges be ready?

    What will happen to the penalty tax if not ready?

    I’m waiting out the first year just to see how all this unfolds. No reason to pay good (excess) money to insurance for a system pool with insufficient young healthy’s to lower my premiums. We all know the sick pre-existing will flock there first.

  3. Hey Ready, Are you certain you are allowed to disclose that information?