The Obama administration Monday finalized an ambitious blueprint for new state-based markets that will offer consumers one-stop shopping along the lines of amazon.com.
It may sound simple enough, but getting there will be like running an obstacle course. The rule comes just two weeks before the Supreme Court takes up a challenge to the constitutionality of the law in a case brought by states. Many governors and legislators are on the sidelines awaiting the outcome, even as time is running out to act.
Starting Jan. 1, 2014, new health insurance markets called "exchanges" must be up and running in every state, the linchpin of a grand plan to make health insurance accessible and affordable to those who now struggle to find and keep coverage. Individual consumers and small businesses will be able to shop online for competitively priced coverage, and many will receive government subsidies to help pay premiums.
"More competition will drive down costs and exchanges will give individuals and small businesses the same purchasing power big businesses have today," Health and Human Services Kathleen Sebelius said in a statement.
Experts say it's anybody's guess how the national rollout will go. If a state is not ready, the law requires the federal government to step in to run its exchange.
"At this point it's still an open question as to whether all the states will open up as of 1-1-2014," said Neil Trautwein of the National Retail Federation, a business group whose members will be heavily affected by the law.
Reaction on Monday to the 660-page rule was mixed. Consumer organizations, the insurance industry and some business groups gave it favorable or neutral reviews. Republican governors panned it.
The new markets are for individuals and small businesses buying plans. Most people who now have employer health insurance will not have to make changes. It's a design that works well in Massachusetts, where an exchange has been in place for several years.
Massachusetts achieved political consensus about its health care overhaul under former GOP Gov. Mitt Romney, who is now seeking his party's presidential nomination. That's far different from the enduring national divisions over President Barack Obama's law, even though it used Romney's as a foundation.
Setting up 50 state exchanges wouldn't be easy even if the federal overhaul enjoyed widespread support.
For things to go smoothly, state and federal officials must work together to verify private personal and financial details for millions of people, make sure that consumers are enrolled in the right health plan, and accurately calculate how much government aid, if any, each household is entitled to.
And with customer service the goal, consumers need to get answers in hours, not weeks.
Nearly 30 million people are eventually expected to get private health coverage through exchanges, about half of whom are currently uninsured.
Another group of uninsured people—as many as 16 million low-income Americans expected to qualify for Medicaid—could also enter the system through their exchanges.
States are moving in fits and starts to set up the new markets. Only 13 states and Washington, DC, have adopted a plan. Progress varies widely among other rest.
Under the law, most Americans will have a legal responsibility to carry health insurance, either through their job, a government program or by buying their own. Millions will receive financial assistance for their premiums.
Whether that amounts to an unconstitutional expansion of federal power is among the subjects of a showdown that begins March 26, when the Supreme Court is set to begin an unusual three days of arguments. A decision is expected by June.
Sebelius says she expects the court to uphold Obama's Affordable Care Act and thinks states will move quickly once the court has ruled.
States have until Jan. 1, 2013 to obtain federal approval for their exchanges. Among the rule's key elements:
— States can receive conditional federal approval for their exchanges if their plans are far along but not final by Jan. 1, 2013. States can operate exchanges in partnership with other states. The federal government will provide funding for different types of exchanges to allow for flexibility.
— The state exchanges themselves will determine the number and type of health plans offered to consumers, within broad standards set by the federal government. Plans will have to comply with marketing rules to ensure they are not trying to cherry-pick the healthiest customers in the state.
— Consumers must be able to apply online for coverage in their state exchanges. To reduce paperwork, exchanges will rely on existing computer databases to verify basic personal information and eligibility. However, some key details, such as whether the consumer is a legal resident of the U.S., may have to be verified by the government. And the IRS will have final say on tax credits.
— Exchanges must be able to pick from two federally approved methods for coordinating with the Medicaid program in their states.
— Exchanges must be able to use intermediaries called "navigators" to help educate consumers and small businesses about how the new system works.
— Exchanges must be financially self-sufficient by 2015, by charging fees to support their operations.