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Arizona official says too many questions doomed state-run health program

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WASHINGTON – Arizona gave up on running its own health-insurance exchange and turned the job over to the federal government instead because of uncertainty over how a state program would work, an Arizona official testified Thursday.

“While Gov. (Jan) Brewer is a strong advocate of local control, there were too many unknowns about how a state-based exchange would operate for Arizona to proceed,” Don Hughes told the Senate Finance Committee.

Hughes, the executive director of Arizona’s health insurance exchange and a health adviser to Brewer, testified that when the state made its decision last fall, many of the federal rules that will guide the program were still in draft form.

“You can’t make decisions based upon draft rules,” said Hughes, noting that many of those rules are still drafts three months later.

That lack of progress was the focus of senators on the committee, who grilled the federal bureaucrat in charge of the health insurance exchange program.

The exchanges, which are part of the federal health-care reform act often called “Obamacare,” are supposed to be online marketplaces where consumers can apply for health insurance. They need to be operating by Oct. 1 when open enrollment is scheduled to begin.

“If it crashes and burns on Oct. 1, then you’ve got a huge problem,” said Sen. Johnny Isakson, R-Ga.

But Gary Cohen, director of the Center for Consumer Information and Insurance Oversight, insisted his office is “very much on track” to meet that deadline, despite the tight schedule.

Hughes conceded that Cohen’s office has a lot of work to do.

“This is a very complicated project and in a very compressed time frame,” Hughes said.

From a technological perspective alone, he said, constructing the website and data-service hub that will be the heart of the exchanges is a challenge. No one has ever tried to develop a program like this before.

The federal data-services hub, which will determine people’s eligibility, needs to communicate with agencies that run Medicaid, Social Security and others that use different computer languages. The website needs to be practically foolproof while providing real-time answers to a potentially massive number of people.

“It has to work right the first time, and every time,” Hughes said.

He was one of four witnesses testifying Thursday about the progress of exchange programs at state and federal levels.

The health-care law gives states the opportunity to set up their own exchanges, which about 20 states have decided to do, or joining the federal government’s program. Brewer decided in late November that Arizona would go the federal route.

Cohen said the federal system aims to give consumers a similar experience, regardless of what state they are in.

“We anticipate the experience will be quite the same across the country,” Cohen said.

Hughes said Arizona “had made significant progress and would have been ready with a fully compliant state-based exchange” had it decided to go that route.

But “the delay in issuing the necessary exchange rules, uncertainty on the status of required federal services and other delays made proceeding with a state-based exchange too risky at the present time,” Hughes said.

He said after the hearing that Arizona is working to get the federal program up and running in the state. But he noted that the state will be able to shift to a state-run exchange at a later date if it wants to.

“It’s a federal program, and we’re going to let the federal government take the lead, at least for the initial opening enrollment period,” Hughes said.