The National Governors Association has written a letter to the U.S. Health Secretary Kathleen Sebelius regarding federally mandated health insurance exchanges. The exchanges have received mixed reviews from state officials, many of whom are still grappling with the vague guidelines provided to them by the Department of Health and Human Services. In the letters, Governors detail how the exchanges may damage a state’s autonomy, as the federal government may end up taking control of certain aspects of the exchange initiative. While the letter does not decry the establishment of exchanges, Governors are calling for more precise information regarding their formation.
Sebelius, in response to the letter, notes that implementation of the exchange program requires several new policies to be enacted on the state level. According to the Affordable Care Act, each state is authorized to decide how their insurance exchange program should be run. The only requirement that the federal government is imposing, apart from making the exchanges mandatory, is that each program must be self-sustaining by 2014. Sebelius says that the lack of direction is meant to afford state legislators with more authority when building the exchanges.
Insurers are torn on the issue. On one hand, the exchange program is expected to bring more competition to the individual and group markets, which may drive down prices for coverage as more companies participate in the program. On the other hand, however, more people will be able to buy insurance, which can translate into higher profits for companies able to stand out amongst the competition.