Online insurance markets set to begin selling health coverage to consumers next October may be hampered by software delays.
State regulators learned late last week that an electronic system most insurers will use to submit their policies for state and federal approvals won't be ready for testing next month, as originally planned. The lag is being blamed on the wait for several regulations from the Obama administration that are needed to update the software.
The slowdown "creates another three-month delay," said Dan Schuyler, a director at Leavitt Partners, a consulting firm working with states to set up the markets, called exchanges. "They're not going to be ready."
Others believe the delay, while not necessarily critical, will further squeeze regulators and insurers, who still have a lot of work to do before next fall. Enrollment is set to begin Oct. 1 for policies that go into effect Jan. 1, 2014.
"The timeline is definitely getting crunched," said Joel Ario, a consultant with Manatt Health Solutions who formerly served as the Obama administration's head of exchange planning. "Insurers tell me they will need final approval of their products by July 1 so they will have three months to actually get set up to market them."
Depending on how long the update takes, "it could make it difficult to have a robust and competitive marketplace on the exchanges," said Kim Holland, a former Oklahoma insurance commissioner who is now executive director of state affairs for the Blue Cross and Blue Shield Association.
An estimated 9 million individuals are expected to use the markets, created by the sweeping health overhaul law, that first year to shop for coverage and to find out if they are eligible for government subsidies.
The Obama administration has maintained that planning is moving forward on schedule and that the exchanges will open on time.
The difficulty in updating the System for Electronic Rate and Form Filing, known as SERFF, is the latest obstacle in the planning for the online marketplaces. Many states stalled preparations as a result of the controversy surrounding the law, with opponents encouraging them to wait to see who won the election first.
Even some supporters are arguing to postpone the opening of the marketplaces to give states and insurers more time.
"If I could wave a magic wand and change (the start) from 2014 to 2015, I would," said Sandy Praeger, Kansas' elected insurance commissioner, whose plan for a state partnership exchange was rejected by Gov. Sam Brownback. "But I don't know if [federal lawmakers] can do that."
A host of technical and regulatory steps must be taken before the exchanges can open, including reviews of every type of policy submitted by insurers to ensure they meet new coverage and pricing standards. Those standards can't be incorporated into the review system, however, until several yet-to-be-issued federal rules are finalized.
While proposed rules --- including how insurers can adjust their premiums based on a consumer's age or where they live — may be released this week, the government will give stakeholders at least a 30-day comment period before finalizing them.
Generally, insurers say it can take a year to 18 months to develop new products and get them approved.
"Without the rules, we can't get the (SERFF) system going," said Holland.
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