KHI News Service

Louisiana says no to ACA health insurance exchange

News comes as Obama administration celebrates health reform's anniversary

By Mike Shields | March 23, 2011

Louisiana officials have decided they will not create and run a health insurance exchange as called for by the Affordable Care Act.

That means the federal government will be left with the responsibility of establishing an online insurance marketplace in that state.

The health reform law, which was enacted a year ago today, gave states the option of creating and running their own insurance exchanges or leaving that task to the federal government. The law requires there be an exchange running in each state by Jan. 1, 2014.

The digital marketplaces are intended to provide the public easily accessible comparisons of the costs and benefits of various insurance plans. They also will serve as points of entry for millions of new Medicaid beneficiaries and also will be the clearinghouse used by those who buy private insurance coverage with the help of federal subsidies or tax credits created by the Affordable Care Act.

Louisiana was one of 49 states, including Kansas, to receive a $1 million federal grant to begin planning an insurance exchange. Kansas later was among a handful of states to receive millions more in "innovation" grants in order to develop exchanges that can serve as models for those in other states. Kansas also has received a $40 million federal grant to modernize its computerized Medicaid enrollment system, which is expected to function seamlessly with or as part of the state's online exchange.

Under the terms of the $1 million grants, states were expected to seriously study whether they should set up an exchange, including circulating drafts of exchange legislation among interested parties. States are required to file quarterly reports with the federal government on how they've spent the grant dollars.

"Too many costs"

It wasn't immediately clear if Louisiana had met the obligations of serious study or reporting or whether it would send back all or part of its $1 million grant.

“They’re looking at that right now,’’ Lisa Faust, a spokeswoman for the Louisiana Department of Health and Hospitals, told

“The program is just broke,’’ Faust said of the ACA's exchange requirement. “It creates way too many costs for the system and for the states.”

Louisiana Gov. Bobby Jindal, like Kansas Gov. Sam Brownback, is among the nation's GOP governors who have been highly critical of the reform law.

Brownback has repeatedly called for the law's repeal and voted it against it while in the U.S. Senate. While campaigning for governor, he called the Affordable Care Act an abomination and pledged to abide by the law while fighting it "every step of the way."

Louisiana officials earlier had questioned the sustainability of the exchanges and said they were upset by the lack of direction and clarity from the Centers for Medicare and Medicaid Services about the regulations that would govern the exchanges. Proposed rules for the new marketplaces are expected to become public sometime this spring.

Two states, Utah and Massachusetts, had exchanges in place before the Affordable Care Act became law. California legislators are considering a bill that would create one in that state.

But most states, including Kansas, are somewhere between Massachusetts and Louisiana when it comes to planning or launching exchanges.

Kansas planning underway

Kansas Insurance Commissioner Sandy Praeger, with endorsment from Brownback, has created an exchange planning committee of more than 100 people that includes a variety of working groups. That committee has met twice and is scheduled to have an exchange plan ready for consideration by the 2012 Legislature. The group met earlier this month for demonstrations from two exchange system vendors.

Louisiana's decision comes even as Obama administration officials were spending the week touting the reform law's benefits as part of anniversary events and as part of ongoing efforts to counter ongoing criticism from Republicans in Congress and in statehouses across the country.

U.S. Health and Human Services Secretary Kathleen Sebelius, a former Kansas governor, held a joint press conference today with Agriculture Secretary Tom Vilsack, a former Iowa governor, to describe how the Affordable Care Act is helping or will help rural Americans.

Sebelius said the law, among other things, included authorization for $11 billion in additional federal aid over the next five years for rural community health clinics.

Sebelius said that money would assure better access to care for millions of rural residents, including improved mental health and dental care.

She also said there were provisions in the law that would lead to 16,000 additional primary care doctors and nurses, many of whom will take advantage of incentives to work in rural areas.

Rural hospitals also will see increased federal payments, "to help shore up the rural safety net," Sebelius said.

Vilsack said many rural seniors have already received a check for $250 each to help cover Medicare drug costs. And new requirements that insurance companies spend a certain ratio of premium dollars they collect on direct health care for policyholders will help rural residents who tend to pay more for the same insurance benefits.

"Insurance companies are now limited on how much can be spent on overhead such as CEO salaries," he said. "In this administration, we believe no one should have to go without health care because of where they live."