Nov. 16–AUGUSTA, Maine — Maine will let the federal government take the reins on setting up a mandated online health insurance market, according to comments Gov. Paul LePage made Thursday to a national news outlet.
States must decide whether to set up the markets, called exchanges, or let the federal government step in to do it for them. The exchanges, online markets where consumers can buy coverage beginning next October, are a key component of President Barack Obama’s health reform law that aims to widen coverage to 30 million people.
LePage told Bloomberg news Thursday that he has no plans to set up an exchange in Maine.
“I’m not lifting a finger,” he said in an interview with Bloomberg at a Republican Governors Association meeting in Las Vegas. “We’re not going to get involved. We’re going to let Mr. Obama do a federal exchange. It’s his bill.”
LePage’s comments came a day before what had been a Friday deadline for states to notify the federal government if they wanted to run the exchanges themselves.
Thursday evening, the Obama administration granted an extension on the deadline, following pressure from a number of Republican governors. States now have until Dec. 14 to submit both their decision and a blueprint for how they plan to set up an exchange.
LePage sent a letter to U.S. Department of Health and Human Services Commissioner Kathleen Sebelius, saying Maine would not set up an exchange.
“The [federal health reform law] is full of federal mandates; as such, even a state-based health insurance exchange is actually controlled by the federal government,” LePage wrote. “In the end, a state exchange puts the burden onto the states and the expense onto our taxpayers, without giving the state the authority and flexibility we must have to best meet the needs of the people of Maine.”
Described as “Travelocity for health insurance,” the exchanges are websites where small businesses and individuals who aren’t covered through their employer can shop for coverage. Enrollment will begin next October for plans that will take effect Jan. 1, 2014.
Consumers can also use the exchanges to determine if they qualify for subsidies to help pay for their insurance or if they’re eligible for Medicaid, the state-federal health insurance program for the poor.
LePage and many other Republican governors have been highly critical of the health reform law, called the Patient Protection and Affordable Care Act. In April, LePage returned a $5.8 million federal grant that would have helped Maine pay for setting up an exchange.
Republican state lawmakers had already hit the brakes on planning for an exchange to wait for the Supreme Court to rule on the health care law’s constitutionality. The law was largely upheld in June.
The Republican Governors Association on Wednesday asked the Obama administration for more time to decide on the health exchange provision. In a letter to the president, Virginia Gov. Bob McDonnell and Louisiana Gov. Bobby Jindal said governors don’t have enough information to assess the effect of the exchanges or to understand how the federal government will implement them.
Republican governors continue resisting implementing major provisions of the law — most of which will take effect in 2014 — in the wake of Mitt Romney’s defeat in the presidential election. Romney had vowed to repeal the health care overhaul. Critical of the law’s costs and regulatory burdens, some Republican lawmakers now hope to block federal funding for the exchanges.
LePage’s decision this week isn’t necessarily permanent in the long term. States can still choose to run their own exchanges after 2014 or pursue a third option, partnering with the federal government.
The extension HHS granted Thursday night was the second this week. Originally, states had to say by Friday not only whether they wanted to run their own exchange, but also how they planned to do so. Last week, the feds gave states another month to submit their plans, but still asked governors to announce their intentions by Friday.
As of Friday morning, 16 states were setting up exchanges themselves and 13 had decided to default to the federal government, according to the Associated Press.
More than a dozen states remained undecided. Five states planned to partner with the federal government on an exchange. HHS has given states until February to decide if they want to take that path in 2014.
States have been wrestling with how to operate the exchanges since the health reform law was signed in March 2010.
The exchanges will make shopping for health insurance much less complicated, according to Joe Ditre, executive director of Consumers for Affordable Health Care.
“The implications are that for the first time [consumers] will actually have access to a side-by-side, apples-to-apples comparison of each insurance company’s plan,” he said. “That’s huge.”
The federal subsidies will make health insurance more affordable and likely encourage additional insurers to sell competitively priced policies in Maine, he said. But LePage’s choice to forgo a state-run market robbed Maine of an opportunity to negotiate with insurers for the best policy prices through its exchange, Ditre said.
Joel Allumbaugh, a health policy expert at the conservative Maine Heritage Policy Center and president of the Maine Association of Health Underwriters, doesn’t buy that argument. Health insurance companies have little leverage over the prices that hospitals, doctors and other health care providers charge, which are the real drivers behind rising costs, he said.
It makes little difference for consumers whether the state or the federal government runs Maine’s exchange, since the subsidies are available regardless and federal requirements for the basic benefits insurers must include in their plans remain the same, Allumbaugh said.
“In the end, the law very much puts the feds in control,” he said. “They certainly pull the strings, so there’s a question about how much control do you really have at the state level to begin with.”