LINCOLN, Neb. (AP) — Iowa and Nebraska are turning down different paths to comply with the federal health care overhaul, which reflects the broader struggle many Republican governors face now that they must submit to a law they feverishly oppose.
Iowa Gov. Terry Branstad said Friday that his administration will continue to work on a state-based exchange, but he left open the possibility of defaulting to a federal exchange or some combination of the two. In Nebraska, Gov. Dave Heineman declared the state-based exchange too expensive and told the federal government to build one for his state.
Heineman and Branstad both insist that they're making a good-faith effort to follow the law, despite a frustrating lack of guidance from the federal government. But Democrats in both states who closely follow health care say the governors haven't done nearly as much as they could have to prepare, betting instead that Mitt Romney would win the presidency and make good on his promise to repeal the law.
This week, the governors had to choose: Launch a state-run health insurance exchange — billed as the best way to maintain local control — or toss it back to the federal government?
At least 17 states and the District of Columbia have committed to creating their own exchanges, five have said they will partner with the federal government, and seven were still pondering their decision. Twenty-one others have decided to let the federal government run the exchanges.
Supporters of the health care law say the exchanges will work for consumers, regardless of who runs them. But the choice could determine how well they function, how competently they're managed, and how easy they are to access.
For instance, will the federal government realize that Internet service is easier to find in Omaha than in rural, western Nebraska? And if that's the case, does western Nebraska need more brick-and-mortar facilities to help residents buy insurance?
"This isn't a giant federal exchange — this is the feds coming in to set up a Nebraska exchange," said Jennifer Carter, a policy director for the public-interest group Nebraska Appleseed. "That may be why not doing a state option was a little bit of a missed opportunity. We can deal with the opportunities and challenges here in Nebraska. But I hope the federal government will be asking for local input, and that the state and others will cooperate so there won't be a really big difference for consumers."
Heineman said he struggled to decide which approach was best, but concluded that a state exchange was too costly for Nebraska taxpayers.
He said a state exchange would force the Nebraska Department of Health and Human Services to tap into federal databases, which would require new software. The state Department of Insurance, meanwhile, would have to pay for a website, call centers, an insurance billing system, supplies and office space.
Heineman said the state has tried to exert control over different aspects of the health care law, but was thwarted by the federal government.
He pointed to the state's efforts to set minimum coverage requirements for Nebraska residents, known as an "essential benefits plan." The health care law lists 10 broad categories of essential benefits, including preventative care, emergency services, prescription drugs and hospital services.
But within those categories, states are allowed to tinker with the coverage levels they want to require when the "individual mandate" to buy health insurance takes effect in 2014. States that fail to establish bare-minimum coverage requirements for insurance plans will have them set by the federal government.
In October, Heineman submitted a high-deductible plan for approval — dubbed the "Nebraska Option" — which mirrors a plan that is already used by 6 percent of Nebraska state employees.
Critics said the plan's $8,000 deductible was too expensive for most Nebraskans, but the argument may now be moot: Heineman said federal regulators called the Nebraska Department of Insurance a few days ago and rejected his proposal.
"If it was going to be a state exchange, we wanted to be able to run it, operate it, and make the key decisions here," Heineman said. "It was clear we couldn't do that. And a very important component to me was the cost."
Omaha Sen. Jeremy Nordquist, a Democrat, said the governor's decision against a state exchange effectively "ceded power to federal bureaucrats, who will now design and control what our health insurance marketplace looks like."
In Iowa, Branstad spokesman Tim Albrecht said the governor wants to avoid a federally run exchange, but unanswered questions about the cost of a state exchange may leave him no choice but to accept "a one-size-fits-all exchange that throws us in with other states."
Branstad sent U.S. Health and Human Services Secretary Kathleen Sebelius 50 questions that he said the federal government has yet to answer. The list includes questions about how the state exchanges would work with the Medicaid program, whether states can switch from a federal exchange to a state or partnership program, and whether the federal government will charge states that want to access federal databases needed to operate their own exchange.
State Sen. Jack Hatch, a Des Moines Democrat, said Branstad should have acted earlier and created a state-based exchange that would fit the needs of the state's younger, urban population and older residents in rural parts of the state.
Scott McIntyre, a spokesman for the Iowa Hospital Association, said his group preferred a state exchange because hospitals had not seen evidence that Congress has approved enough money to launch a marketplace for the states. Iowa also relies on three dominant players in health care — Medicare, Medicaid, and one larger private insurer — he said.
"We want to make sure that it conforms to Iowa's needs," McIntyre said. "I don't know if we have a particularly unique insurance market here, but it's basically dominated by Medicare, Medicaid and Blue Cross/Blue Shield. We don't know for certain that a federal model would be able to address that."