The document discusses state flexibility and responsibilities in implementing health insurance exchanges under the Affordable Care Act. Key federal deadlines for exchange implementation include releasing proposed exchange rules in July 2011, finalizing rules in late 2011, and having exchanges begin open enrollment in 2014. States have significant responsibilities over the next 3 years to pass legislation establishing exchanges, file exchange plans with the federal government, and conduct operational planning. The proposed exchange regulation grants states flexibility in designing exchanges, such as choosing their governance structure and role in health plan bidding.

1. Insurance Exchanges /Federal Regulations & State Flexibility August 3, 2011 Bonnie Washington Avalere Health LLC

2. States Have Substantial Implementation Responsibilities in the Next 3 Years Federal Activities Deadline for Approval or Conditional Approval of State Exchange Plan January 1, 2013 Proposed Exchange Rule Released July 2011 Final Exchange Rule Expected Late 2011 Affordable Care Act Passed March 23, 2010 Exchanges Begin 2014 2010 2011 2012 2013 2014 State Activities Pursue Legislation or Executive Order to Implement an Exchange File Exchange Plan Establish Governing Boards Operational Planning & Implementation Open Enrollment Plan Bids Submitted

3. States Are Busy Implementing Exchanges As the Federal Government Issues Regulations WA ME MT ND VT NH MN OR MA WI NY ID RI SD CT MI WY PA NJ IA NE DE OH NV IN IL MD WV UT VA D.C. CA CO MO KY KS NC TN OK SC AZ AR Adopted Establishing Legislation (11) NM GA AL MS Exchange in Operation (2) LA TX AK Adopted Legislation Requiring New Study (3) FL Issued Executive Order Requiring New Study (6) HI In Progress (28) Source: Avalere Health Reform State Insights, July 15, 2011.

4. Proposed Exchange Regulation Grants States Significant Flexibility to Establish Exchanges

6. At least half of all voting board members must represent consumer interests10-person board in the Department of the Insurance Commissioner Includes consumer and employer representation, plus one plan rep WV WV CA Government-Run Independent 5-person independent, quasi-governmental board Includes appointed members that may not represent health plans or providers

7. WA ME MT ND VT NH MN OR MA WI NY ID RI SD CT MI WY PA NJ IA NE DE OH NV IN IL MD WV UT VA D.C. CA CO MO KY KS NC TN OK SC AZ AR NM GA AL MS LA TX AK FL HI Presence of Benefit Mandates Varies Significantly By State Number of Mandates < 15 16 - 30 31 - 45 46 – 60 > 60 1.Source: Council for Affordable Health insurance, http://www.cahi.org/cahi_contents/resources/pdf/MandatesintheStates2010.pdf

9. States may set additional requirements for participating plansUT The state’s exchange accepts all health plans licensed to offer coverage in the state WV Passive Facilitator Active Purchaser Requires plans to adhere to specific benefit designs, excluding those that do not compare favorably MA

11. Includes groups up to 100 employees—states may include larger employers or limit to <50

12. Exchanges must offer employee choice—states and employers may limit plan options or offer extra flexibility to choose between tiersSeparate exchanges; SHOP limited to groups <50 Minimum requirements for employee choice WV Limited Market, Less Flexibility Large Market, Broad Flexibility Integrated exchanges; SHOP eligibility expanded to large groups Broad employee choice options for employers

13. Other State Flexibility in Exchange Implementation *Employee choice means that employers select a benefit tier (e.g., silver) and employees can enroll in any plan in the tier (e.g., Aetna or Blue Cross Blue Shield)

14. Separate Rulemaking Will Address Additional Exchange Related Topics Detailed requirements on the federal fall-back exchange that will operate in states that fail to establish an exchange will likely be covered in subregulatory guidance