HHS offers states extra time on exchanges

The Obama administration gave states extra time Friday to decide whether they'll implement the key feature of the Affordable Care Act.

Health and Human Services Secretary Kathleen Sebelius gave states that aren't ready to run their own exchanges an extra three months to decide whether they'll split the task with HHS or leave it entirely up to the federal government.

The ACA envisions each state running its own exchange, but authorizes a federal fallback in states that don't move to set up their own marketplace. HHS had asked states to decide by Nov. 16 whether they intend to move ahead on an exchange, but extended that deadline to Feb. 15 for certain states.

"This Administration is committed to providing significant flexibility for building a marketplace that best meets your state's needs," Sebelius wrote in a letter to governors Friday.

States that intend to operate an entirely state-based exchange must still make that intention clear by next week's deadline, but Sebelius said they don't have to provide a specific blueprint for their exchanges until Dec. 14.

States have until next year — Feb. 15 — to decide on an exchange operated jointly between the state and HHS. The "partnership" model could be attractive to governors who had held off serious implementation work until after the presidential election but do not want to completely cede control to the federal government.

Conservatives are urging states not to take any action on exchanges, saying their resistance is the best way to undermine the law now that the Supreme Court upheld it and President Obama's reelection ensured it will not be repealed.

But even some conservative governors have been quietly studying how an exchange would work, preferring to set their own rules rather than defer to HHS.

The healthcare law requires HHS to certify by Jan. 1, 2013 whether each state will be able to have its own exchange up and running by Jan. 1, 2014.

Exchanges will function as one-stop shops where small businesses and people who do not get coverage through their employer can shop for insurance. HHS would prefer to see states operate their own exchanges, because insurance is regulated primarily at the state level, and it has previously extended funding deadlines to try to coax reluctant governors to pick up at least part of the task.

— This post was updated at 5:34 p.m.

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