WASHINGTON — Obama administration officials are getting ready to set up and operate new health insurance markets in about half the states, where local officials appear unwilling or unable to do so.
The markets, known as exchanges, are a centerpiece of President Obama’s health care law, and running them will be a herculean task that federal officials never expected to perform.
When Congress passed legislation to expand coverage two years ago, Mr. Obama and lawmakers assumed that every state would set up its own exchange, a place where people could shop for insurance and get subsidies to help defray the cost.
But with Republicans in many states resisting the creation of exchanges or deterred by the complexity of the task, federal officials are preparing to do the job, with or without assistance from state officials.
“We realize that not all states will be ready to establish these exchanges by 2014, so we are setting up a federally facilitated exchange in those states,” said Michael Hash, the top federal insurance regulator. “We are on track to go live in October 2013, which is the beginning of the first open season for the individual and small group markets.”
Governors of 13 states with nearly one-third of the United States population have sent letters to the Obama administration saying they intend to set up exchanges. Complete applications are due on Nov. 16, just 10 days after the presidential election.
Federal and state officials and health policy experts expect that the federal government will run the exchanges in about half of the 50 states — a huge undertaking, given the diversity of local insurance markets.
The federal exchanges will vary from state to state. The Obama administration will not define a single uniform set of “essential health benefits” that must be provided by all insurers, but will allow each state to specify the benefits within broad categories.
In running an exchange, federal officials face a delicate political task. They will encourage people to enroll, promoting the exchange as an important part of Mr. Obama’s health care overhaul. But they do not want to feed fears of a federal takeover or alienate state officials whose help they need.
Much work will be done by contractors. With public opinion deeply divided over the new law, the Obama administration has invited advertising agencies to devise an elaborate “outreach and education campaign” to publicize the federal exchanges and their potential benefits for consumers.
In addition, federal officials are looking for private contractors to provide “in-person assistance” to consumers and to operate call centers. A contractor will also help the government decide who gets federal subsidies, expected to average $6,000 a person, and who is exempt from the tax penalties that will be imposed on people who go without insurance.
Federal officials have turned to the American subsidiary of a Canadian company, the CGI Group, to provide information technology services to the federal exchanges under a contract that could be worth $93.7 million over five years.
An exchange is a sort of supermarket where people can compare prices and benefits of health plans offered by insurance companies. People will be able to file applications online, in person, by mail or by telephone.
Mr. Hash, the director of the federal Office of Health Reform, said the federal exchanges “will operate essentially in the same manner as the state-based exchanges.” However, they differ in a significant way. States have done their work in public, but planning for the federal exchanges has been done almost entirely behind closed doors.
“We have gotten little bits of information here and there about how the federal exchange might operate,” said Linda J. Sheppard, a senior official at the Kansas Insurance Department. “I was on a panel at Rockhurst University here, and I was asked, ‘Where is the Web site for the federal exchange?’ I chuckled. There really isn’t any federal exchange Web site.”
Sabrina Corlette, a research professor at the Health Policy Institute of Georgetown University, said the federal exchanges were “much more opaque” than the state exchanges.
In New Hampshire, Thomas M. Harte, the president of Landmark Benefits, which arranges health insurance for 300 employers of all sizes, said: “Nobody has any idea what the federal exchange will look like. There has not been much communication between officials drafting plans for the federal exchange and the people who will use it: consumers, employers, brokers and insurers.”
Gov. John Lynch of New Hampshire, a Democrat, wanted to set up an exchange. But the Republican-controlled legislature blocked the idea, so the state will have a federal exchange.
Some states are still weighing their options. Dan L. Crippen, executive director of the National Governors Association, predicted that the federal government would initially run the exchanges in more than half of the states. A similar forecast came from Prof. Timothy S. Jost, an expert on health law at Washington and Lee University.
The 2010 health care law says that if a state runs its own exchange, it must “consult with stakeholders,” including consumers and small businesses. Subsequent rules go further, requiring states to consult health care providers, insurers, agents and brokers.
Kathleen Sebelius, the secretary of health and human services, has repeatedly emphasized that “states have to meet a standard of transparency and accountability.” A state exchange must have “a clearly defined governing board,” and the board must hold regular public meetings.
States as diverse as California, Minnesota, Mississippi and Nevada have Web sites where they post documents laying the groundwork for exchanges. The documents include minutes of public meetings, cost estimates and information about contracts for goods and services.
By contrast, federal officials have disclosed little about their plans, are vague about the financing of the federal exchanges and have refused even to divulge the “request for proposals” circulated to advertising agencies.
The federal government requires a state exchange to develop a budget, with “expected operating costs, revenues and expenditures.” States must explain how the revenue will be generated and how the exchange will address “any financial deficits.”
Administration officials have not set forth a budget for the federal exchanges. They said they intended to charge “user fees” to the participating health insurance plans, but it is unclear whether the fees are subject to approval by Congress or whether insurers could pass the costs on to consumers.
State officials have many questions. John M. Rusche, a Democrat who is the minority leader of the Idaho House of Representatives, said he wanted to know “how much of the federal exchange will be standardized and how much will be customized” to the needs of each state.
Mr. Rusche said he also wanted to know how the federal government would decide whether a health plan had enough doctors and hospitals in its network. In setting standards for “network adequacy,” he said, it would help if federal officials understood the geography of Idaho, where the nearest hospital could be two hours away.
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