On March 23, 2010, President Obama signed into law a comprehensive health care reform bill, the Affordable Care Act (ACA). The ACA includes numerous reforms aimed at improving the U.S. health care delivery system, controlling health care costs and expanding health coverage. The ACA’s reforms have staggered effective dates, with many key reforms taking effect in 2014.
The ACA is a federal law, which means that federal agencies, namely the Departments of Labor, Health and Human Services and the Treasury, are primarily responsible for the law’s overall enforcement. However, the ACA also creates significant responsibilities for state governments. A number of the ACA’s key health care reforms will be carried out at the state level.
The ACA requires each state to have a health insurance exchange (Exchange) to provide a competitive marketplace where individuals and small businesses will be able to purchase affordable private health insurance coverage, effective Jan. 1, 2014. According to the Department of Health and Human Services (HHS), the Exchanges will make it easier for individuals and small businesses to compare health plan options, receive answers to health coverage questions, determine eligibility for tax credits for private insurance or public health programs and enroll in suitable health coverage.
Individuals and small employers with up to 100 employees will be eligible to participate in the Exchanges. However, states may limit employers’ participation in the Exchanges to businesses with up to 50 employees until 2016. Beginning in 2017, states may allow businesses with more than 100 employees to participate in the Exchanges. Enrollment in the Exchanges begins on Oct. 1, 2013.
States have three options with respect to their Exchanges. A state may:
• Establish its own state-based Exchange;
• Have HHS operate a federally facilitated Exchange (FFE) for its residents; or
• Partner with HHS so that some FFE Exchange functions can be performed by the state.
In addition, a state may elect to partner with HHS so that the state runs the Exchange’s small business health options program (SHOP) component and HHS runs the Exchange’s individual market component.
States that intend to pursue a state-based Exchange or a state partnership Exchange must submit an application to HHS for its approval. If a state does not move forward with its Exchange or select the partnership model, HHS will operate the FFE in the state.
To date, there are 17 State-based Exchanges, 7 Partnership Exchanges and 27 Federally-facilitated Exchanges.
This legislation is ever evolving and we anticipate additional changes as enrollment in Exchanges continues. Check our blog for regular updates.