Virginia will not operate a state-based health insurance exchange, Gov. Bob McDonnell said Friday, though he is leaving the door cracked to potentially changing course.
In a letter to U.S. Secretary of Health and Human Services Kathleen Sebelius, McDonnell says that he lacks certainty about states having the "necessary flexibility, control and funding of their own exchanges."
States that do not select to operate their own exchange can opt for the federal exchange or partner with the federal government to jointly run an exchange that would act as a clearinghouse for health insurance plans for many individuals and small businesses.
McDonnell writes that "if the federal government's exchange is inadequate, or more concrete information becomes available from your office suggesting the clear benefits of a state-run exchange to our citizens, a later decision to revert to a state-based exchange is permissible under the law."
Sebelius gave governors until Friday to submit a blueprint for creating their own exchanges under the Patient Protection and Affordable Care Act. States have until February if they want to enter into a partnership.
As of Friday afternoon, 19 states had chosen not to run their own health insurance markets, according to the Associated Press, while 17 states and Washington had said they want to set up and run their own markets.
The law requires HHS to certify by Jan. 1, 2013, that a state will be prepared to open an exchange for enrollment by Oct. 1 and operation by Jan. 1, 2014.
By allowing the federal government to operate and fund the exchange, the state is reversing a stance taken by McDonnell and the General Assembly in 2011 to operate the state's own exchange, if the health care law was upheld.
Virginia health insurers favor creation of a state-based exchange and the Virginia Health Reform Initiative Advisory Council, appointed by McDonnell and chaired by Secretary of Health and Human Resources Bill Hazel, also supported creation of a state exchange.
Senate Democratic leaders, including Sen. A. Donald McEachin, D-Henrico, recently called on McDonnell to convene a special session of the General Assembly to create a state-based health insurance exchange.
McEachin said Friday that McDonnell's decision was "not unexpected."
"The governor has shown a resistance to this notion of setting up an exchange that deals with Virginians in a Virginia way," he said, adding that a larger issue is Medicaid expansion -- another decision facing the states under the health care act.
McDonnell said in a release accompanying the letter that he originally asked that the state begin planning for a state-based exchange "primarily so we would be in control of this process."
"However, despite repeated requests for information, we have not had any clear direction or answers from Washington until recent days, and we cannot conclude, as we review those materials, that we would have the control and flexibility needed to efficiently and effectively run our own state exchange," he said.
"If Virginians are faced with running a costly, heavily regulated bureaucratic exchange without clear direction from Washington, then it is in the best interest of our taxpayers to let Washington manage an exchange at this time."