By David Morgan
WASHINGTON (Reuters) - Only 15 U.S. states have told the federal government they plan to operate health insurance exchanges under President Barack Obama's reform law, leaving Washington with the daunting task of creating online marketplaces for two-thirds of the country.
On the eve of a federal deadline for states to say whether they will run their own exchanges, a top U.S. healthcare policy official told lawmakers that the exchanges will start enrolling eligible families starting on October 1, 2013.
"I am confident that states and the federal government will be ready in ten months, when consumers in all states can begin to apply," Gary Cohen, director of the Center for Consumer Information and Insurance Oversight, told a health oversight panel in the U.S. House of Representatives.
Cohen was among federal officials who testified alongside state health authorities at a hearing of the House Energy and Commerce Subcommittee on Health.
In written testimony, Cohen said that while 15 states have told the administration they will operate exchanges, 11 others have opted for versions that will require major involvement by the federal government.
Experts say the number of states planning to operate their own exchanges could reach 18, plus the District of Columbia, by the time the deadline arrives Friday.
But the administration would still be left to set up exchanges in at least 30 states, a challenge that is raising questions about how successfully U.S. officials can implement a key provision of the healthcare reform law, known to opponents and advocates alike as "Obamacare".
"I don't envy them for the job that they have," said Dennis Smith, who heads health services in Wisconsin, a state that has decided not to pursue its own exchange.
"At the end of the day, you're trying to connect a buyer to a seller. And the fundamental things required to do that are not yet in place," he said.
The Patient Protection and Affordable Care Act, which Obama signed into law more than 2-1/2 years ago, is expected to extend health coverage to more than 30 million uninsured Americans. Those who enroll starting in October would be covered by insurance from January 1, 2014.
About half of those newly insured individuals would purchase private coverage from online exchanges at federally subsidized rates. Ultimately, the number of people finding coverage through exchanges is expected to reach 26 million, according to the nonpartisan Congressional Budget Office.
The remainder would be covered by expanding the Medicaid program for the poor to cover all adults earning up to 133 percent of the federal poverty level, or about $15,000 for individuals and $30,600 for a family of four.
Thursday's hearing provided a political stage for partisan rhetoric that has come to surround implementation of Obama's health reforms. The reforms have survived repeated Republican repeal efforts, a nail-biting consideration by the Supreme Court and a challenge to Obama's re-election.
Republicans and state officials from Republican-led states complained about compliance costs and accused the Department of Health and Human Services (HHS) of delaying the release of vital details and rules needed to move forward on the exchanges and on the planned Medicaid expansion.
"The uncertain regulatory environment and the overall lack of response from HHS are not encouraging the states or the health plans to move forward," said Representative Michael Burgess, a Texas Republican.
In response, Congressional Democrats and their state allies stressed the law's benefits for senior citizens, protections for young adults and the sick, and the prospective economic benefits from an expected influx of billions of dollars in federal money.
"The (Republican) move now is to delay implementation under the guise of lack of information," said Representative Frank Pallone, a New Jersey Democrat.
"The world in fact is not coming to an end," he added. "The nation will be better because of the Affordable Care Act."
States that don't run their own exchanges would opt for one of two alternatives: a federally facilitated exchange that requires minimal state participation, or a federal partnership exchange in which states help by performing certain duties.
States have until February 15 to say whether they intend to seek a federal partnership exchange. Four have done so already, Cohen said.
The administration will have to engineer an information technology system capable of processing operations in a way that meet the needs of healthcare consumers in different states.
Experts say the biggest challenge will likely be providing adequate customer service to handle enrollment, as well as fielding a technology system capable of interfacing seamlessly with the system of each state government.
Cohen told the panel that the administration is building a website with interactive capabilities and a call center and has begun testing a data services hub designed to determine eligibility.
(Reporting by David Morgan; Editing by Ros Krasny, Jilian Mincer and Nick Zieminski)