States all over the map on exchange creation

The Kaiser Family Foundation reported Wednesday on states’ progress in developing one of the key pieces of federal health reform, the health insurance exchange, and found that Connecticut is among the states furthest along.

The federal reform law requires each state to have a health insurance exchange–a marketplace for buying coverage–by 2014. The exchanges will have a variety of functions, including ensuring that health plans meet certain standards and keeping track of people who are exempt from the law’s individual mandate.

Connecticut is one of 13 states where legislation establishing an exchange has been enacted. In 15 states, including New York, Rhode Island, Maine and New Hampshire, exchange legislation failed to pass, while in 10 states no exchange legislation was proposed, according to the report. Massachusetts and Utah already have functioning exchanges, while the governor of New Mexico vetoed an exchange bill and Louisiana Gov. Bobby Jindal’s administration has declared that the state won’t have an exchange.

Of the states with plans for an exchange on the books, eight including Connecticut will make the exchanges quasi-governmental organizations, while two will have nonprofit corporations run the exchanges and three will operate them within state government with independent boards.

Health plans sold on the exchanges must meet certain standards set by the federal government, but states have leeway in determining whether all plans that meet the qualifications can be sold on the exchange or whether the exchange can be selective about which plans it includes. Connecticut is one of five states, including Massachusetts and Utah, with exchanges that are expected to be selective, something known as an “active purchaser model.”

The report notes that the three states without existing exchanges that are pursuing the active purchaser model, Connecticut, Maryland and California, have among the most restrictive conflict of interest provisions for their exchange boards, with board members prohibited from having relationships with insurers, health care providers or facilities, and others in the health care sector.

The board of Connecticut’s exchange is expected to be appointed soon.