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June 2011 St@teside

State Roundup: Health Benefit Exchange Legislation

The 2011 state legislative session has included significant activity on the issue of exchanges and more states have passed legislation on exchanges. As of June 24, 2011, 10 states have enacted legislation establishing a state-based exchange, six states—Illinois, Maine, Mississippi, Montana, Utah, and Wyoming—have passed legislation to establish a study panel or commission. Two states—Virginia and North Dakota—have passed legislation that expresses an intent to create an exchange, without providing details on how it should be governed and administered.1

The first state to pass exchange legislation was California followed by Colorado, Connecticut, Hawaii, Maryland, Washington, West Virginia and Vermont. In June, Nevada and Oregon became the latest states to pass exchange legislation. New York came very close to passing legislation establishing an exchange as a public entity, but the Senate adjourned before passing the agreement that had been passed by the Assembly. According to an aide to the legislation’s co-sponsor, Insurance Committee Chairman Sen. James Seward, it is likely that the Senate will take up the exchange bill when it reconvenes for a housekeeping session in a few weeks.2

Seven of the 10 states that have passed legislation to establish an exchange are planning to establish a quasi-governmental governance structure—California, Colorado, Connecticut, Maryland, Nevada, Oregon, and Washington. Vermont and West Virginia plan to have a state agency operate the exchange, while Hawaii’s exchange would be operated by a non-profit organization.3

States have also addressed conflict of interest on exchange governing boards. Six states have language that prohibits insurers or agents/brokers from serving on the exchange board—California, Connecticut, Maryland, Nevada, Vermont, and Washington. Three states—Colorado, Hawaii, and Oregon—permit but do not require insurers and/or brokers to serve on the board. One state—West Virginia—requires insurers and agents/brokers to serve on the exchange board.4

In addition to working to pass exchange legislation, several states also set their sites on the June 30 Level One Establishment Grant application deadline. According to the U.S. Department of Health and Human Services’ website, 10 states issued letters of intent to submit applications, but not all of those are expected to do so.5

State Roundup


On June 17, Oregon’s Governor John Kitzhaber signed a bill establishing an exchange as a public corporation supervised by an executive director and governed by a seven-member board with five members appointed by the governor and two ex-officio members. The governing board must include at least two consumer representatives and no more than two representatives from various health care sectors, including insurance.  The law requires the board to submit business plans to the legislature for approval by February 2012. The early policy decisions the board needs to make include:

  • Establishing standards for qualified plans;
  • Determining the role of “navigators”; and
  • Determining whether the risk mediation programs included in the Patient Protection and Affordable Care Act (ACA) are sufficient or if additional state-level risk mediation will be needed.6


Nevada’s Governor Brian Sandoval signed a bill on June 16 that will create the Silver State Health Insurance Exchange, a quasi-governmental entity.  The board is composed of seven voting members and three ex-officio nonvoting members. Of the seven voting members, five are appointed by the governor, one is appointed by the Senate majority leader and one is appointed by the speaker of the Assembly. Voting members cannot be legislators or hold office in the state government, nor can they be representatives of the insurance industry. The law requires that the exchange facilitate the purchase and sale of qualified health plans, provide for the establishment of a program to help certain small employers in Nevada to enroll employees in qualified health plans, as well as perform other duties pursuant to the ACA.


Connecticut’s bill establishing the Connecticut Health Benefits Exchange passed the Senate on May 31 and the House on June 4, 2011.7 The bill is expected to be signed by Governor Dan Malloy, who worked with Connecticut’s legislature to fashion an approach to allow the state to continue its implementation of the public option SustiNet program while proceeding with the establishment of an exchange. Among its provisions, the bill would establish an exchange board composed of 11 members. The governor would select one of the three people the board nominates as the CEO for the exchange. The board member cannot be employed or affiliated with insurers, insurance producers or brokers, health care providers or health care facilities or their trade groups. In addition, the individual needs to have expertise in small employer health insurance coverage, health care delivery systems, access issues that self-employed people face, barriers to individual health care coverage, health care finance, and benefits plan administration. The legislation appoints a "SustiNet cabinet" with responsibilities that include determining whether and, if so, how to create a publicly administered health plan option; and making recommendations about whether to implement the Basic Health Program option of the ACA.


Alabama’s exchange legislation had not passed by the time the session adjourned in early June. However, on June 2, Governor Robert Bentley signed an executive order creating the Alabama Health Insurance Exchange Study Commission. The commission is required to study and make recommendations by December 1, 2011, on the most effective way for the state to move forward with the establishment of the Alabama Health Benefits Exchange.

It is composed of 14 members including the chairman of the House and Senate health committees, the Medicaid commissioner, the insurance commissioner, and the state finance director. Other members of the commission will include physician providers, for-profit insurance carriers, not-for-profit insurance carriers, the business community, nursing homes and hospitals, and insurance agents.

1Center on Budget and Policy Priorities. (2011, June 24). Analysis of State Health Insurance Exchange Legislation: Establishment Status and Governance Issues. Retrieved June 28, 2011 from
2Astor, W. (2011, June 28). Insurance exchange plan hits snag in Senate. Rochester Business Journal. Retrieved, June 28, 2011 from
3Center on Budget and Policy Priorities. (2011, June 24). Analysis of State Health Insurance Exchange Legislation: Establishment Status and Governance Issues. Retrieved June 28, 2011 from
5PoliticoPro│Health Care. (Subscription only). (2011, June 27). Exchange Week: Big doings in 8 states, D.C. Retrieved June 28, 2011 from
6Shukovsky, P. (2011, June 7). Legislature Approves Health Insurance Exchange Corporation to Open in 2013. BNA’s Health Care Policy Report (Subscription only). Retrieved June 22, 2011, from
7Center on Budget and Policy Priorities. (2011, June 24). Analysis of State Health Insurance Exchange Legislation: Establishment Status and Governance Issues. Retrieved June 28, 2011 from