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Minn. experts welcome new soft deadline for health insurance exchanges

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Some Minnesota health insurance experts are welcoming the Obama Administration's proposal to soften deadlines for a cornerstone program of the health care overhaul.

State health insurance exchanges are aimed at allowing individual consumers and people who work for small businesses to compare and buy private health insurance online. Under the law, states had to show they could operate these exchanges by January 2013, but the hard start date could now have some give.

Consumers won't be able to use the exchanges for another 2 1/2 years, but the health law initially set a deadline of Jan. 1, 2013 for when states had to show they could operate an exchange. Otherwise, the federal government would establish an exchange for them. But now the government says it will allow states to obtain conditional approval even if they're not completely up and running by that time.

The rules signal that the federal government will adjust to the needs of states, said University of Minnesota health economist Lynn Blewett.

"They seem to want to encourage flexibility. They want to encourage states to be proactive, and so I think this is a good indication of that flexibility," Blewett said.

Due to the state government shutdown, no one was available from the Minnesota Commerce Department to comment on the new federal regulations.

But additional flexibility could be particularly helpful to the state because the shutdown has already halted a major market research project. The state is also seeking proposals for development of the exchange's online infrastructure. Submissions are due next Wednesday.

Julie Brunner who heads the trade group that represents Minnesota's HMOs welcomed the new rules, and says Minnesota has a lot of company. 

"A lot of other states are in the same position in terms of not having established legislation at this point," Brunner said. "So it provides some elbow room to accomodate where states are."

According to the Kaiser Family Foundation, some states such as Maryland and California passed legislation to create exchanges, but other states such as Louisiana rejected them outright.  

Health and Human Services Secretary Kathleen Sibelius says the proposed rules are based on health exchanges operating in Massachusetts and Utah. The proposals are to provide consistency across the nation and allow states to tailor exchanges to their own markets. 

The Congressional Budget Office estimates that nearly 9 million individuals will sign up for the exchanges in 2014 and expects that number to more than double by 2018.

Bloomington-based Ceridian is at work building and operating health insurance exchanges. Vice President Manny Munson-Regala says Ceridian will submit a proposal to help build Minnesota's exchange.  The new proposed rules allow states the flexibility to leave some of the more complex parts of exchanges to the feds, he said.

"A state may conclude that they are uncomfortable or aren't prepared to administer the portion of the exchange that does the individual subsidy tax credits," Munson-Regala said. "The federal government may run that exchange for them while the state runs the small business exchange."

The government estimates that tens of billions of dollars would shift between insurers once exchanges are operating. To stabilize insurance markets, money would have to flow between insurers with healthier populations to those with sicker, more expensive groups.

But it's hard to know whether those transfers will be adequate because exchanges will cause so much change in the market, said Scott Keefer, vice president for public policy and legislative affairs for Blue Cross Blue Shield of Minnesota.

"It's very difficult at this point to determine what the full consequences will be — not just from the standpoint of those who come into the exchanges ,who might not have insurance now —  but what happens with respects to shifts in employer-sponsored coverage and individuals that might come into the exchange," Keefer said.

The proposed rules are open to comment for 75 days. The states also await another key set of regulations determining insurance plan coverage. That's due out later this year.