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Governor: Federal government on hook for Alaska health insurance exchange

Eric Christopher Adams

The state of Alaska will not create its own health insurance exchange.

Gov. Sean Parnell's office announced Tuesday that after studying the project for some time, his administration has opted not to offer a state-maintained website, known as an exchange, where consumers would theoretically be able to view competing health insurance plans and choose one that provides the best value and options.

Health insurance exchanges are required under the health care reform law, passed by Congress, signed by the president and upheld last month by the U.S. Supreme Court. The exchanges were envisioned as a shop-and-compare website for health insurance -- similar in concept to consumer websites like Expedia for travel or Esurance for auto insurance -- with the goal of making health insurance information more accessible to Americans, all of whom will be required to purchase health plans by 2014 or risk paying a penalty.

Here's how state senators described the benefits of a health insurance exchange in a letter sent to Parnell in 2011:

"A state-operated health insurance exchange would focus on connecting individuals and small businesses in Alaska with affordable health coverage through tax credits and a competitive marketplace.  It creates a level playing field where insurers have to compete for customers."

Parnell has been skeptical about the exchange's benefits for Alaskans, though, and the cost of those perceived benefits.

"Allocating state dollars and personnel to design and implement an exchange is the most expensive option," Parnell was quoted as saying in a press release distributed Tuesday. "It doesn’t make sense to spend Alaskans' dollars to set up an exchange when so much uncertainty exists about how to implement it and how to gain federal approval. Federally mandated programs should be paid for by federal dollars."

Alaska was among the only states in the nation that didn't accept $1 million from the federal government to study how to implement an exchange. Later, the state spent its own money to retain a consulting firm to study how best to implement a health-insurance exchange here.

What does Parnell's decision mean?

Under federal law, Alaska must have an exchange ready by 2013. The deadline is meant to ensure that other aspects of the health reform law are implemented smoothly in 2014, when the law goes fully into effect. By opting not to create an exchange, the U.S. Department of Health and Human Services will create one for the state.

Contact Eric Christopher Adams at eric(at)alaskadispatch.com