States all over the map in setting up health insurance exchanges; Kentucky officials say they await more federal guidance

A breakdown of where states stand in implementing pieces of the federal health-care reform law shows Kentucky lagging behind. But Kentucky officials say they're awaiting more direction from the federal government before they decide their next move.

A map compiled by the Center for Budget and Policy Priorities shows Kentucky is one of 11 states that did not even introduce legislation to form a health insurance exchange, considered one of the cornerstones of the new health care law. The center says 33 states have considered bills to establish an exchange, and 10 passed. Another nine have approved bills declaring the state's intent to establish them.

The state exchanges, which are to be launched in 2014, will act as insurance marketplaces. In the exchange, individuals and employees of small businesses can choose from several plans from companies such as Anthem or Bluecross/Blueshield, whose benefits coverage packages have been pre-approved by the state and federal governments.

As part of the new law, individuals with income as much as 400 percent above the poverty level may qualify to buy insurance from the exchange. Individuals that do qualify will be given federal subsidies to help pay their premiums, subsidies people can only get if they buy their insurance through the exchange. "They'll be incentivized to buy their insurance through it," said Carrie Banahan, executive director of the Office of Health Policy in the Cabinet for Health and Family Services.

So far, though, Kentucky has not made any moves toward setting up its exchange. Banahan said that is largely because the federal government has not decided what benefits the plans in the exchange must include. "They'll basically set up a minimum of what these plans need to include," she said. "We're still awaiting federal guidance."

Asked if the administration of Gov. Steve Beshear is delaying action so the health-care law won't become an issue in the Nov. 8 election, in which Beshear is seeking a second term, chief cabinet spokeswoman Jill Midkiff replied in an email, "The federal government has not issued final guidance through regulations on the exchange. States cannot make decisions to establish an exchanghe without knowing the requirements in order to determine programmatic and financial implications."

If states don't set up an exchange on their own, the federal government will do it for them, though Banahan said Kentucky officials are reluctant to let that happen. "The federal government is encouraging states to operate their own exchanges," she said. "They're looking at states to take the lead so they can model and craft their own exchange to meet the needs of their state. If the federal government came in, they don't know Kentuckians like we know Kentuckians."

As indicated by the map, several states have chosen to create an exchange by passing legislation. In some others, governors have done it through executive orders. Banahan said there is still time for Kentucky to weigh its options. "We haven't missed the boat," she said. "We're still just looking ... No final decisions have been made."

Other states' decisions do not necessarily follow party lines. Nevada and California passed exchange bills under the leadership of Republican governors. Delaware and Rhode Island, which have Democratic governors, have not budged on exchange legislation.

Only Florida and Louisiana have "expressly stated they won't build the marketplace," Sarah Kliff wrote for The Washington Post. Both have Republican governors, "But there are a lot of other states in the gray area above that could fall either way. If a few larger ones like Texas or New York aren't able to move forward in the next year or so, that's going to have the federal government playing a really big role in setting up what was meant to be a state-based law." (Read more)

Ultimately, whether Kentucky sets up its own exchange or the federal government does, Banahan said an exchange is needed. "We think it's a good thing that more people will have health insurance accessible to them," she said.