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May 2011 St@teside

State Roundup: Health Benefit Exchange Legislation

While states around the country continue to grapple with the question about whether or not to pursue the development of a state-based exchange, a great deal of activity on exchange legislation has been occurring in a number of states.

In addition to the California exchange bill that was enacted in September 2010, eight states have passed some version of exchange legislation as of May 26, 2011. Colorado, Hawaii, Maryland, Washington, Vermont, and West Virginia have enacted legislation post-ACA that establishes exchanges. Virginia and North Dakota last month passed bills stating the intention to establish a state-based exchange.

The vast majority of states with pending or passed exchange legislation are planning to establish a quasi-governmental governance structure. In total, three states are planning to house the exchange in a state agency, 29 are planning to establish a quasi-governmental entity, and five plan to establish a not-for-profit exchange. States have also addressed conflict of interest on exchange governing boards. Twenty states have language that prohibits insurers or brokers from serving on the board; seven permit but do not require insurers and/or brokers; nine require insurers and brokers; and three require insurers but not brokers.1

State Roundup:

Arkansas’ regular legislative session ended April 27. The legislature introduced several bills that either indicated intent to create or establish a state exchange; however, no legislation was passed. While the legislature will reconvene February 2012 for a fiscal session, the 89th General Assembly will not resume regular business until 2013. Consequently, Arkansas’ governor and insurance commissioner are assessing whether to use an executive order to establish the exchange. Indiana experienced the same issue earlier this year. When Indiana’s exchange study legislation did not pass before the end of its session, Governor Mitch Daniels signed an executive order establishing the Indiana Family and Social Services Administration, Department of Insurance, and other related state agencies to operate the nonprofit Indiana Insurance Market, Inc.

On May 3, Colorado passed exchange legislation. The bill establishes the Colorado exchange as a nonprofit, unincorporated public entity that will set up a market for health insurance. A board of directors consisting of nine members appointed by the governor, the president of the Senate, the speaker of the House of Representatives, and three ex officio non-voting members will govern the exchange. State legislation permits but does not require insurers and/or brokers to serve on the board. The legislation was supported by a bipartisan coalition of business advocates, health industry leaders, and consumer representatives. Colorado lawmakers see the bill as the first bipartisan legislation to be passed due to endorsements from the National Federation of Independent Business and the U.S. Chamber of Commerce. Both groups are fighting the Patient Protection and Affordable Care Act (ACA) in lawsuits that have reached federal courts.

On May 5, Hawaii passed exchange legislation that establishes a private, nonprofit entity. The legislation creates a 15-member board of directors appointed by the governor, an interim board to recommend policies and procedures to implement the governance of the exchange, and appropriates federal funds to support the operations of the interim board. Similar to Colorado, state legislation will permit but not require insurers and/or brokers to serve on the board. The bill was sent to Governor Neil Abercrombie on May 6 and is expected to be signed.

Louisiana is one of 13 states without any exchange legislation introduced for the 2011 session. On March 23, Secretary of Health and Hospitals Bruce Greenstein announced that the state would not run its exchange and will hand it over to the federal government in 2014.

Minnesota’s legislature ended May 23, leaving two introduced exchange bills undecided. The legislature also adjourned without an agreement on the state budget, forcing it to call a special session in the next couple of months where exchange legislation may be reintroduced. The two introduced bills had opposing governance language. One established the exchange operated by a state agency and the second created the exchange as a nonprofit organization.

Mississippi’s legislative session ended April 7, adding it to the list of states that did not pass exchange legislation. The state’s Insurance Department is considering its authority to house the exchange under the state’s high-risk health insurance pool. The department is currently looking into whether the high-risk pool has the authority to lead the exchange. Governor Haley Barbour supported the state’s establishment of a health benefit exchange and backs the option of housing it under the high-risk pool.

Vermont Governor Peter Shumlin will be signing legislation today that establishes an exchange. For more information, please read the Vermont article in this edition.

Oklahoma has pending legislation expressing the intention to establish a state-based exchange. Oregon’s bill would establish the exchange as a public corporation with a board composed of three voting ex officio members and six members who are appointed by the governor. Oregon’s Senate passed its version of the bill and it has been referred to the Health Care Committee as of April 29.

In addition to Arkansas and Indians, six other states—Alaska, Arizona, Georgia, Missouri, Montana, and New Mexico—have failed, expired, or withdrawn legislation.

Three states—Mississippi, Utah, and Wyoming—have passed legislation studying an exchange, while two others—Illinois, and Nebraska—have pending study legislation. In addition, Massachusetts and Utah have existing exchanges that will need to be adapted to comply with federal law.

1Chandra, D. (2011, May 18). Analysis of State Health Insurance Exchange Legislation Establishment Status and Governance Issues. Center on Budget and Policy Priorities. Retrieved May 24, 2011from