Heineman says feds, not state, to run health insurance exchange

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November 15, 2012 - 5:37pm

A marketplace designed for Nebraskans to get subsidized health insurance in 2014  will be run by the federal government, not the state, Gov. Dave Heineman announced Thursday.

The announcement came one day before the deadline for states to say whether they will run their own health insurance exchanges or let the federal government do it, when that part of the Affordable Care Act, or Obamacare, takes effect in January, 2014.

 Exchanges are markets accessible online, in person or by phone where people who don’t get health insurance from their employer will be able to buy subsidized health insurance. Small businesses can use the exchanges as well.

 Nebraska insurance companies and others have argued it would be better to have the state run the exchange. But Thursday, Heineman said that would cost too much, and for too little benefit. “Building a state exchange would result in reduced funding for key state priorities,” he said. “The bottom line is a state insurance exchange is really controlled by the federal government, and the cost of operating a state insurance exchange is very expensive.”

Citing figures from the Nebraska Department of Insurance, Heineman said a state-operated exchange would cost Nebraska taxpayers $646 million over the rest of this decade, compared to $176 million if the federal government did it. He said the higher state costs would include call center operations and information technology.

Sen. Jeremy Nordquist of Omaha, a registered Democrat in the officially nonpartisan Legislature, questioned the cost cited by the Republican governor. Reached while traveling in Israel, Nordquist accused Heineman of ceding power to federal bureaucrats. “The administration of the exchange could have been bid out to a private vendor, creating a new industry in the state. But rather, those millions of dollars a year to run this will be sent to Washington and spent how federal bureaucrats decide to spend it,” he said.

It remains unclear what effect the decision will have on people who use the exchange. Some observers have suggested a federally-run exchange could offer more generous policies to consumers. The governor said the federal government recently rejected his administration’s proposal for a high-deductible basic benefits package, something he said many consumers want.

Heineman said that’s another sign states won’t really have much say over the exchanges, regardless of who administers them. “On the key issues, there is no real operational difference between a federal exchange and a state exchange,” he said. “A state exchange is nothing more than a state administering the Affordable Care Act with all of the important and critical decisions made by the federal government. The Affordable Care Act is being totally dictated and totally controlled by the federal government.”

Nordquist said the decision may wind up being better for consumers, but it represents a missed opportunity. “Ultimately, this may end up being better, under a Heineman administration, that the federal governments (sic) are calling the shots. But as far as making the decisions, I would rather have those decisions  made locally by Nebraska policymakers,” he said.

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