Health insurance exchange extension?

States are unlikely to meet January 2014 deadline.

States are unlikely to meet the Jan. 1, 2014, deadline for implementing health insurance exchanges, a long-shot scenario that will require the Health and Human Services Department to extend the deadline, predict industry analysts.  

“I think we should absolutely expect a delay,” Scott Lundstrom, vice president of the IDC Health Insights market research group, recently told Government Health IT. “As someone that watches large organizations deploy large systems every day, I don’t see any of the telltales that I would look for in a deployment here.”

Lundstrom also casts doubt on the possibility that more state politicians will drop their opposition to state health insurance exchanges now that the election is over.

“I don’t doubt that some states will,” he said. “But if you read the verbiage of the regulations around the exchanges the federal government has said that it will cover the incremental costs for some period of time. They haven’t said that they’ll cover it forever.”

He added: “Many states are concerned that while they will be reimbursed for the Medicaid expansion for some period of time, it’s not going to happen indefinitely. There will be a point at which more and more of this liability is going to get pushed off on the states.”

Moreover, the issue isn’t just one of financing or federal reimbursement, Lundstrom told the magazine.

“These are substantial IT projects,” he said. “They’re not simple. They require staffing, services, significant interaction with suppliers. … They require significant resources.”

A state that hasn’t already started building an exchange can’t complete one by the federal deadline, he said. The deadline for states to declare whether they would build their own exchange or let the feds build it for them, or operate in partnership with them, was Friday. Only 18 states and the District of Columbia said they would take on the task themselves, Kaiser Health News reported.

A challenge for the federal health insurance exchange network will be coordinating with state Medicaid programs and making it easy for people to use the exchange, Ceci Connolly, managing director at consulting firm PricewaterhouseCoopers, told Kaiser Health News.

“It is going to be a sprint for government officials and the industry to be ready by next fall,” Connolly told the news service.

There may be a silver lining to the decision of most states to go with the federal health insurance exchange model, Lundstrom said in his Government Health IT interview.

“Honestly, to have 50 states do their own thing is probably a disaster, too,” he said. “Go talk to a software vendor that has 50 different applications in 50 different states to see how well organized and how well-run they are.”