In response to requests from some states, the Secretary of Health and Human Services (HHS) issued a letter to governors November 9, 2012, extending the deadline for submitting applications for state-based exchanges until Friday, December 14, 2012. In addition, states pursuing a state partnership exchange for 2014 will have until February 15, 2013, to submit their declaration letter and application.

One of the central features of the Patient Protection and Affordable Care Act is the development of new insurance marketplaces, called “exchanges,” in every state in time to enroll people by January 1st 2014.  If a state chooses not to implement its own exchange, or if it becomes apparent by January 2013 that the state will not be ready to operate an exchange by January 2014, the Secretary of Health and Human Services (HHS) will set one up for that state.

Exchanges are designed to serve as a place where individuals and businesses can shop for coverage with the help of easy-to-understand information on all their options. Plans sold through exchanges will have to meet certain standards so that consumers get good value for their money. The exchanges will serve an important purpose for people who are middle or low-income.

They will be the place where people can purchase insurance with the tax credits that the Affordable Care Act provides to make coverage affordable for all Americans.  In addition, when individuals who are eligible for Medicaid or other public coverage programs enter the exchange, they will quickly and smoothly be directed to the correct program.

The Affordable Care Act envisions that states will develop and run their own exchanges (or, if any states fail to do that, a federally operated exchange will serve residents of those states). The law contains many provisions to make sure that state implementation goes smoothly and that the exchanges work for consumers.

Although these provisions establish a critical baseline of protections to help exchanges work well, states still have many tasks to complete and choices to make regarding the development and operation of exchanges. With the right choices, states can make sure that exchanges function as intended: as marketplaces for high-value coverage that are user-friendly, transparent, and stable.

The Affordable Care Act also leaves states with many options and choices regarding exchange design such as: Will the state have a separate exchange for businesses and individual consumers, or will they shop in the same exchange.  The path that states take will ultimately determine whether exchanges are consumer-friendly and whether consumers are ultimately able to get coverage.

The health reform law also allows states to band together to form combined, or regional, exchanges, as long as all states involved agree and the Secretary of HHS approves. States could describe any plans they have to form or join a regional exchange.  Each state has until November 16th 2011 to provide the federal government details on a state-run exchange.

Some states like Tennessee were lagging on the issue so the federal government gave them until December 14th to submit the details on a state-run exchange.  Governor Bill Haslam opposes the new health care law but said he can see reasons for not deferring the exchange to federal government.  He feels a state-run program would be more beneficial to the state than a federally run exchange.

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