(Reuters) – New health insurance exchanges being set up by the federal government in more than 30 states under President Barack Obama’s 2010 healthcare overhaul could miss an October 1 deadline for open enrollment, a government report said on Wednesday.

The launch of the exchanges, or marketplaces, which are expected to provide federally subsidized health coverage for 7 million people in 2014 and 22 million by 2016, could determine whether Obama’s signature domestic policy achievement succeeds. The administration will operate exchanges in 34 states, while the remainder operate their own markets.

The report by the nonpartisan Government Accountability Office (GAO) said U.S. officials have missed deadlines and remain behind schedule on key parts including those that involve consumer eligibility for federal subsidies, the certification of health plans to be sold on the exchanges and the hiring and training of special “navigators” to guide people through the enrollment process.

GAO found that states have also failed to complete many of the tasks assigned for implementation and that the administration has conducted only initial testing of the computerized system that will link the exchanges with states and federal agencies including the Internal Revenue Service.

A separate GAO report found that the exchanges for small businesses that are also being created under the Patient Protection and Affordable Care Act are behind schedule, with about 44 percent of the key activities targeted for completion by March 31.

But in both cases, the government watchdog agency said much progress had been made in completing major tasks necessary for implementation, including establishing the regulatory framework for reform.

The Department of Health and Human Services (HHS) has also completed contingency plans and is prepared to carry out additional exchange functions that individual states may prove unable to assume, according to GAO.

“Whether these efforts will assure the timely and smooth implementation of the exchanges by October 2013 cannot yet be determined,” the GAO report concluded.

While interim deadlines that have been missed up to now may not affect implementation, the agency added, “additional missed deadlines closer to the start of enrollment could do so.”

‘NOT READY FOR PRIME TIME’

Federal officials, led by U.S. Health and Human Services Secretary Kathleen Sebelius, have vowed repeatedly that the federal exchanges set up under the healthcare law, also known as “Obamacare,” will be ready on time in states that have chosen not to implement their own marketplaces, often because of political opposition from Republican governors and legislators.

The administration reiterated that stance in response to the report, telling the GAO authors that “HHS is extremely confident that on October 1 the (federal) marketplace will open on schedule and millions of Americans will have access to affordable quality health insurance.”

Republicans, who want the law repealed and have blocked new federal funding for the implementation effort, said the GAO report confirmed a picture of an administration ill-prepared for implementation more than three years after Obama signed healthcare reform into law.

“This law isn’t ready for prime time, and come October, millions of Americans and small businesses are going to be the ones suffering the consequences,” said Senator Orrin Hatch, top Republican on the Senate Finance Committee.

The GAO report underscores the changing complexities that confront the federal government and individual states as the Patient Protection and Affordable Care Act edges toward full implementation on January 1.

In addition to the federal exchanges addressed by GAO, several states that had planned to operate their own exchanges have turned to Washington for support in the past two months.

After HHS allowed states to split responsibility for the individual and small business exchanges, Utah decided that it would hand the individual exchange to the federal government. Idaho and New Mexico, whose efforts had been stalled until earlier this spring by their state legislatures, have also decided to use federal technology to get their exchanges going.

(Reporting by David Morgan in Washington and Caroline Humer and Sharon Begley in New York; editing by Paul Simao and Matthew Lewis)

The Obama administration hoped to attract robust competition
in creating the exchanges, and it is counting on millions of
Americans without coverage to sign up for these plans in the
program’s first year.

But the nation’s biggest insurers have decided against
joining the exchanges on a large scale, professing uncertainty
about the roll-out and how much the uninsured would participate.
Most are sticking to states where they already sell insurance
directly to individuals, leaving at least half a dozen states
with only one or two health plans to choose from.

That gives Magnolia, part of Centene Corp, and other
small insurers like Molina Healthcare Inc that
specialize in serving the poor through state Medicaid programs,
a major role in the push to expand U.S. health coverage.

“They are going to be important players in the exchanges
that are going to attract a significant low income and modest
income population,” said Linda Blumberg, a health economist at
the Urban Institute, a research firm in Washington D.C.

A similar scenario is playing out in Alaska, Vermont, Rhode
Island and Maine, where one small insurer – typically a regional
insurer – will have an equal shot at the market against one
larger player. These states, and others like Mississippi where
competition has traditionally been slim, are a land grab
opportunity for these small companies.

The Obama plan had envisioned competition keeping prices low
and drawing the uninsured into the exchanges. The federal
government aims to get 7 million Americans to sign up for health
plans on the exchanges in their first year, and 24 million by
2016, aided by subsidies to purchase coverage. Enrollment begins
Oct. 1 for plans that take effect in January.

U.S. Department of Health and Human Services spokesman Brian
Cook said the department was working hard to create competitive
marketplaces across the country.

But in states like Mississippi where there is no real
competition, residents will have a hard time judging whether
they are getting a good price. Consumers who prefer a certain
doctor or hospital may not have access.

MISSISSIPPI BLUES

Mississippi, already one of the nation’s toughest healthcare
markets because of poverty and the relative poor health of its
residents, appears to be in the weakest position among all 50
states as the reforms kick in.

It is a piece of the large growth market that Centene,
Magnolia’s St. Louis-based parent, is eyeing. At a conference
last month, Ed Kroll, its senior vice president of finance,
estimated annual spending on exchanges in the 19 states where
Centene will operate by 2016 will reach $50 billion.

The company, which generated $8.7 billion in revenue last
year, had about 2.6 million members at the end of 2012 and
focused on the under-insured and uninsured. Centene declined to
comment for this story.

Figuring out the right premiums to charge when serving the
poor is not an easy business. Centene sued to exit its Medicaid
contract in Kentucky last year after higher utilization in the
state ate its profits there and then some.

Last year, shares of companies like Molina Healthcare and
Centene were trading at a premium because of acquisition
interest as companies such as Aetna and WellPoint acquired small
players with government business.

Centene’s shares have risen 15 percent so far this year,
underperforming the 23 percent gain for the Morgan Stanley
Healthcare Payor Index.

Molina’s shares have risen 35 percent so far this year,
outpacing its peers. Based in Long Beach, California, it had
about 1.8 million members at the end of 2012 and generated $6
billion in revenue last year.

Molina has applied to sell plans in all nine states where it
provides Medicaid services: California, Washington, Utah, New
Mexico, Texas, Ohio, Michigan, Wisconsin and Florida. Some of
those states, such as California, Ohio and Florida, have
competition, while Utah and New Mexico – states with fewer
insurers now – are expected to draw just a handful of
competitors. Like many states, they have not announced which
insurers have applied.

“We are really targeting patients up to about 200 and 250
percent of the federal poverty level,” Dr J. Mario Molina,
Molina’s chief executive, said in an interview. The federal
poverty level for a family of four is $23,550 in annual income,
and 250 percent of that is $58,875 per year.

The insurer is targeting the parents of children who receive
services through the government’s Children’s Health Insurance
Program. Molina also sees an advantage in being able to price
low compared to a commercial insurer like WellPoint or Aetna.

“Since we don’t offer commercial products, we aren’t paying
the providers at commercial rates,” Molina said. “The products
look a lot like the Medicaid plans that we are currently
administering. We have worked hard to get providers to contract
with us at rates that make products affordable.”

BIG COMPANIES STAY AWAY

Mike Chaney, Mississippi’s commissioner of insurance, had
hoped the state’s exchange would attract the big companies
already active in the region, such as BlueCross BlueShield of
Mississippi, UnitedHealth Group Inc and Cigna.

HHS officials are still trying to persuade other insurers to
sign on. “So far, they are beating their heads against the
wall,” Chaney said.

UnitedHealth, which plans to be on a dozen state exchanges
and Cigna, which has targeted five, each said that Mississippi
was not part of their respective strategies. UnitedHealth did
not rule out entering the state at some point in the future.

BCBS of Mississippi, which has 64 percent of the commercial
market in that state, declined comment.

A state that faces challenges treating chronic diseases in a
rural population, about 20 percent or more than 500,000
Mississippi residents are uninsured. It has had a tough time
planning for Obamacare.

Mississippi was the only state to have its application to
build an exchange rejected by HHS, which argued the Republican
governor did not support it. The governor, Phil Bryant, also
refused to expand the state’s Medicaid program for the poor
under Obama’s reform.

HHS took over building the marketplace, one of 33 it will
operate nationwide after many states, particularly ones led by
Republicans, refused to run them.

The U.S. Department of Justice said in a letter on Monday that it planned to comply with a court’s ruling to allow unrestricted sales of Plan B One-Step and that it would withdraw its appeal on the matter.

The move is the latest in a lengthy legal fight over the morning-after pill, which was until recently only available without a prescription to women 17 and older who presented proof of age at a pharmacist’s counter.

Plaintiffs in a federal lawsuit against the FDA said the limits unfairly kept women and girls from accessing the drug, which is most effective when taken within 72 hours of intercourse.

On April 5, U.S. District Judge Edward Korman said the U.S. Food and Drug Administration had been “arbitrary, capricious and unreasonable” in rejecting a citizen petition to make emergency contraception available over-the-counter to girls of all ages.

Korman ordered the FDA to make emergency contraception available without age and point-of-sale restrictions, but said that the agency could lift restrictions on only the one-pill version of the drug, Plan B One-Step, if the FDA believed there was a significant difference between that and the two-pill version.

The Department of Justice will not seek to lift restrictions on the two-pill Plan B product, which it says is significantly different from the one-pill version.

The FDA in April granted a petition from Plan B One-Step’s maker, Teva Pharmaceutical Industries, to make the pill available without a prescription to girls as young as 15.

The FDA said it would lift the remaining age restriction on Plan B One-Step once it received the appropriate application from Teva. Teva declined to comment.

Annie Tummino, lead plaintiff and coordinator of the National Women’s Liberation, said, “This decision by the administration affirms what feminists have been fighting for all along – the morning-after pill should be available to females of all ages, on the shelf at any convenience store, just like aspirin or condoms.”

Plan B has been a political lightning rod. In 2011, after the FDA decided to approve over-the-counter sales with no age limits, U.S. Health and Human Services Secretary Kathleen Sebelius had ordered it to reverse course, barring girls under 17 from buying the pills without a prescription.

President Barack Obama supported that restriction, invoking his daughters. But the timing, 11 months ahead of the presidential election, sparked criticism that he was trying to placate social conservatives.

(Reporting by Jessica Dye and Caroline Humer; Editing by Lisa Shumaker)

(Reuters) – President Barack Obama will tell Americans they are getting a good deal out of healthcare reform during a trip to California on Friday, where an argument is raging over whether it is living up to its name as the Affordable Care Act.

Support for the reform in California, the nation’s most populous state, is seen as crucial to the success of Obama’s signature domestic policy when millions of uninsured Americans are able to choose health plans beginning on October 1.

At issue are prices for the new health plans proposed by insurance companies and made public late last month. Supporters of “Obamacare” said the prices were lower than expected and hailed them as an early sign of success, but opponents quickly took issue and said they would make insurance more expensive than what is currently on the market.

People with incomes well below the poverty level will do well since their coverage will be eligible for government subsidies, said Joseph Antos, a health policy expert with the American Enterprise Institute, a conservative think tank.

“It’s going to be the one’s further up who end up paying. It’s also the taxpayer who is going to end up picking up the cost of the subsidies that are going to be offered nationwide,” he said.

It may take months before Americans can fully gauge the value of the plans they will be offered in October. The premium rates figuring into the California argument are only preliminary, while details – such as how large the network of doctors is in each plan – remain unknown.

With six million uninsured residents, California has been one of the quickest states to develop its own health insurance exchange. Healthcare advocates hope that as many as one million uninsured Californians will sign up for the new plans in the first year and lead other states to do the same.

“Implementation needs momentum and creating momentum in California is a really good move for them. It’s a large market and a positive media market for the President. He’s going to get coverage when he goes to California. And what they need to do right now is amp up the visibility around implementation,” said Dan Mendelson, chief executive of research firm Avalere Health.

Covered California, the California state exchange, said on May 23 that it had given initial approval to 13 different companies to sell plans on the insurance exchange, from big names like Anthem Blue Cross of California, part of WellPoint Inc, to smaller players such as Health Net Inc and Molina Healthcare Inc.

Rates would be from 2 percent above to 29 percent below the 2013 average premium for small employer plans, according to state exchange officials. The cost to a 40-year-old would be between $40 to $300 per month for a mid-level plan, depending on their income level and subsidies.

“Obviously, there is more work to do on affordability. Even in the best of circumstances, health insurance isn’t cheap,” said Anthony Wright, executive director of Health Access California, a statewide consumer advocacy coalition.

RATE SHOCK

Billed as a success by the state and federal governments and health economists that first day, the rates have since come under fire. Healthcare policy expert and Forbes commentator Avik Roy said that prices were in fact going up as much as 146 percent for some people when compared with prices for individual plans for sale now in California.

This “rate shock” argument – that rates would be too high to be affordable – sprung up again. It had been espoused by insurance executives and Republicans, but was quieted earlier last month after low proposed premiums were released by a few other states including Washington, Oregon and Vermont.

Obama is expected to defend this critical piece of his reform – the affordability of insurance on the health insurance exchange in California due to competitions and premiums – during his speech in San Jose, White House spokesman Jay Carney said earlier this week during a briefing.

Enrollment is essential for the success of these insurance exchanges as the government seeks to get millions of Americans to sign up and provide a diverse enough risk pool to make the insurance competitive. The government will pay subsidies to people who earn less than 400 percent of the federal poverty level.

“It’s premature right now for people to be figuring out whether they can afford this,” said Linda Blumberg, health economist at the Urban Institute.

Marketing for the new insurance plans in California and other states running their own exchanges is expected to take off in July. Blumberg hopes that is when information about the benefits of these insurance products will become clearer: that they provide essential benefits like maternity coverage; that they cannot deny customers based on preexisting conditions; and that there is financial assistance.

Those and other changes under the health law, such as men and women paying the same price on the exchange, are some of the reasons why it is difficult to compare California’s announced prices for 2014 with currently available individual plans.

In addition, there are up to four tiers of health exchange products under Obama’s health law, starting with a minimum amount of coverage set by the government and climbing higher.

“The policies are different – generally more comprehensive. They offer better coverage, less out of pocket costs,” said Gerald Kominski, director of the UCLA Center for Health Policy Research.

(Editing by Michele Gershberg, Fred Barbash and Leslie Gevirtz)

(Reuters) – Generic drugmaker Actavis Inc, itself the subject of takeover speculation, said on Monday it would buy specialty pharmaceutical company Warner Chilcott Plc for $5 billion in stock to expand its branded drug portfolio, lower taxes and increase profits.

Warner Chilcott brings a portfolio of branded women’s health pharmaceuticals, such as the contraceptive patch to Actavis, which makes and sells drugs that are no longer under patent protection.

This is the second major acquisition in the past two years for Actavis, which competes against substantially larger companies like Teva Pharmaceuticals Industries Ltd and Mylan Inc.

The move comes after reports that Actavis was a takeover target after weeks of reports that it had spurned approaches from Canadian pharmaceutical company Valeant Pharmaceuticals International Inc and Mylan. Analysts have said that buying Warner Chilcott would kill the chances of a takeover of Actavis.

Actavis Chief Executive Officer Paul Bisaro declined to comment on the deal speculation during a conference call with analysts.

“I think we have remained very focused on our objectives,” Bisaro said. “We wanted to get bigger in our brand business.”

The deal also would benefit the company’s tax structure, he said.

Actavis said the deal would add 30 percent to earnings per share in 2014, in part because it would pay lower taxes when it incorporates in Ireland, where Warner Chilcott is based.

“The longer-term benefit of a lower tax rate is that it allows you to acquire other companies at even better prices,” said BMO Capital Markets analyst David Maris. He said he expected the company to continue with more deals – maybe even bigger ones – after digesting Warner Chilcott.

“This is a sector that’s consolidating, so they’ll clearly be pursuing more deals, but first they have to close this one,” Maris said. “More are likely in 2014 and 2015.”

Earlier this year, Watson Pharmaceuticals changed its name to Actavis, which it bought last year.

After it buys Warner Chilcott, Actavis will retain its name and have $11 billion in annual sales, up from $5.91 billion in 2012.

$8.5 BILLION WITH DEBT

Warner Chilcott shareholders will receive 0.16 share of the combined company. The companies said that would equate to $20.08 per share, based on Actavis’ closing share price of $125.50 on Friday.

The purchase price is a 34 percent premium to Warner Chilcott’s closing share price of $15.01 on May 9, the day before the companies disclosed that they were in talks. Warner Chilcott shares since rose to close at $19.19 on Friday, narrowing the premium to less than 5 percent.

The stock was up 4.4 percent at $20.06 in morning trading, while Actavis rose 3.5 percent to $129.90.

Warner Chilcott will have about a 23 percent stake in Actavis after the deal.

The companies said the deal, including debt, was valued at $8.5 billion.

Actavis advisors were Bank of America Merrill Lynch and Greenhill. Warner Chilcott was advised by Deutsche Bank.

(Additional reporting by Ransdell Pierson in New York and Esha Dey in Bangalore; Editing by Sriraj Kalluvila and Lisa Von Ahn)

(Reuters) – In a boost for President Barack Obama’s healthcare reform law, two states in the Northwest said on Friday that insurance companies submitted applications to sell policies on the states’ health insurance exchanges at rates well below what some insurance executives had predicted.

The insurance marketplaces are a key element of the reform law, which is due to take full effect in 2014. A core principle of these exchanges is that competition, along with government subsidies and other measures, will keep rates affordable.

The sweeping reform known as Obamacare seeks to extend health insurance to many of the 49 million Americans without it, and alter how care is delivered so as to curb what has been an inexorable rise in healthcare spending. Congressional Republicans who oppose the law had warned that high premiums would sink Obamacare as the uninsured would not be able to afford coverage even with federal subsidies.

As of Thursday, nine insurers had notified the Washington Healthplanfinder, the state’s online marketplace, of their intent to offer 57 plans — with different deductibles, premiums and coverage options to individuals and families.

The state will evaluate the plans to ensure they offer what the reform law calls “essential health benefits,” such as coverage for preventive care, and meet other requirements.

“We were pleasantly surprised at how great the rates look,” said Washington exchange spokesman Michael Marchand. “After subsidies many people will pay even less, and they’ll get more benefits” than are offered in many current policies.

Companies including Bridgespan, Premera Blue Cross and Group Health Cooperative submitted proposals to sell health insurance on Washington’s health insurance exchange.

Middle-tier policies would have monthly premiums of $239 under Bridgespan’s proposal, $228 for one from Premera Blue Cross and $210 for one from Group Health Cooperative for a 21-year-old. Policies would cost $305, $292 an $268, respectively, for a 40-year-old; and $648, $620 and $569 for a 60-year-old.

The actual amount a person would pay would be reduced by subsidies Obamacare offers to people whose income falls below a level set at four times the federal poverty line.

Premera and Group Health are among the carriers that currently dominate Washington’s health insurance market.

MIXED COMPETITIVE BAG

Cover Oregon, that state’s insurance exchange, attracted plans from 12 insurers, said spokeswoman Lisa Morawski, including FamilyCare Health Plans, Health Net Health Plan of Oregon, Kaiser Foundation Health Plan of the Northwest, LifeWise Health Plan of Oregon and Regence BlueCross BlueShield of Oregon.

Proposed premiums for a 40-year-old non-smoker range from $169 to $422 per month for plans with different levels of coverage, “much more reasonable than some people had been predicting,” said Gary Claxton, a vice president of the Kaiser Family Foundation.

Claxton said some had forecast premiums double or triple what Oregon and Washington have announced.

Oregon and Washington both appear to be benefiting from heavy competition, though both states had that even before Obamacare. Whether a state has defaulted to a federally run insurance exchange or is running its own, the competitive landscape is starting to look somewhat similar: insurers are sticking to the markets they know.

In small markets like Maine, Alaska and Vermont, only two insurers have proposed to sell policies on the exchange. States with large insurance markets now – like Virginia and Maryland – are attracting many insurers.

RATE SHOCK

Rates will be different in each state and affected by changes in the risk pool as more people are insured, the American Academy of Actuaries said in a report this week.

Insurance executives have warned about rate shock on the exchanges. Health and Human Services Secretary Kathleen Sebelius has said that some groups, such as young men, will likely pay more in 2014, at least before federal subsidies kick in.

Earlier this year Vermont announced rates higher than in Washington or Oregon. Monthly premiums for the lowest level of coverage range from $350 for a single person to $983 per family.

Some states are still waiting for insurer applications and making changes to their model, according to Avalere State Reform Insights, a monthly report that looks at health reform developments. Colorado, for instance, just issued a formal request to insurers for plans for its exchange.

(Editing by Ben Berkowitz, Mary Milliken and Andrew Hay)

(Reuters) – Kentucky Democratic Governor Steve Beshear said on Thursday he will expand Medicaid coverage under President Barack Obama’s healthcare reform law, a move that will cut the state’s uninsured population almost in half.

The expansion will extend coverage to adults earning up to 133 percent of the federal poverty line, providing public health assistance to more than 300,000 people.

That would nearly halve the number of people in the state – 640,000 – who lack health insurance, Beshear said in a statement.

Kentucky’s current Medicaid program provides no coverage for adults without dependent children.

Under Obama’s Patient Protection and Affordable Care Act, states can expand coverage starting January 1, 2014. About 11 million people nationwide are expected to benefit by 2016.

In recent months, opposition to Obama’s Medicaid plan has grown louder in Republican-controlled states such as Florida and Texas, with state legislatures rejecting the expansion or choosing not to consider it.

In Kentucky, the governor is revising the state’s Medicaid eligibility rules, said Beshear spokeswoman Kerri Richardson. Legislators have the power to review the changes and accept or reject them. But the governor can still implement them, she said.

Kentucky’s government is split between Democrats and Republicans but its politics has a strong conservative flavor. The state’s representatives in Congress include U.S. Senate Republican leader Mitch McConnell and Republican Senator Rand Paul, a favorite of the fiscally conservative Tea Party movement. Both want the law repealed.

The Medicaid expansion is one of the healthcare law’s biggest provisions. But a U.S. Supreme Court ruling last year allowed states to opt out. So far, 22 states and Washington, D.C., have accepted the expansion, while 18 states have turned it down, according to the consulting group Avalere Health.

The federal government is offering to pay 100 percent of the cost of the expansion for the first three years, falling to 90 percent by the end of the decade.

Beshear made the decision after an internal analysis and outside studies conducted by the University of Louisville and the Price Waterhouse Coopers accounting and actuarial firm. The research concluded that the expansion would create 17,000 new jobs and add $15.6 billion to the state’s economy between 2014 and 2021.

Beshear said Kentucky considered but ultimately rejected a plan like one proposed by Arkansas, which would expand coverage to low-income people by using federal Medicaid dollars to buy private insurance. The governor said that idea proved too costly.

(Additional reporting by David Morgan in Washington; Editing by Doina Chiacu)

Tenet runs hospitals mainly in Texas and other Southern states, which have high proportions of uninsured people. It expects improvements in its business next year as more Americans obtain coverage either through subsidized insurance exchanges in each state or an expansion of the Medicaid program for the poor.

But the enrollment effort has been threatened by opposition from Republican governors and lawmakers and delays to building the exchanges and launching outreach programs to explain how they will work. The exchanges are due to start enrolling new customers on October 1 for benefits that will take effect on January 1, 2014.

“We’re taking matters into our own hands,” Tenet Chief Executive Officer Trevor Fetter said on Tuesday at the Reuters Health Summit in New York.

Tenet is awaiting final word from the government on whether hospitals can act as approved guides, or navigators, for these exchanges. The company’s hospitals already have extensive experience in helping uninsured patients who show up in its emergency rooms to check whether they are in fact eligible for Medicaid or other assistance programs.

Each year, Tenet enrolls 125,000 patients who walk through its hospital doors in Medicaid programs, Fetter said.

“We know who these people are, because they’ve been coming to us, many of them. So we are really excited about the opportunity to turn everything on its head and reach out to the currently uninsured and help them gain health insurance and enroll in these programs.”

The new insurance marketplaces will offer coverage to individuals and families. Those with low-to-moderate incomes will receive subsidized rates. About 7 million people are expected to sign up for healthcare coverage in 2014 through the state-run and federal exchanges, with up to 24 million onboard by 2016.

About 20 percent of the nation’s uninsured, estimated around 50 million people, are concentrated in 13 counties and Tenet has hospitals in five of the top seven counties, the company said. In Texas where it is based and has 11 hospitals, 30 percent of people do not have insurance.

Enrollment has become a hot-button issue for the health exchanges, and politicians have questioned whether the government is doing enough to ensure the success of the exchanges.

Tenet, the No. 3 U.S. for-profit hospital operator, and competitors have experienced a slowdown in use of medical services in the past few years as the weak economy, changes in health insurance plans and other factors have kept consumers from opting for elective services.

TEXAS WILL COME ALONG

Another possible boost for admission rates at hospitals is the expansion of Medicaid under Obama’s health reform, which has been accepted by governors in about half of the 50 U.S. states.

The federal government pays for 100 percent of the Medicaid expansion in the first three years and then 90 percent after that under the 2010 Affordable Care Act.

Texas Governor Rick Perry has been firmly against expanding Medicaid coverage, but Fetter expects the state to come along one day.

“I do believe that eventually Texas will not let this federal support go to waste, and I believe that there is widespread acknowledgement in Texas that the current Medicaid safety net is inadequate,” Fetter said.

There is still a possibility that Texas could expand Medicaid this year before the state legislative session closes in a few weeks, he said.

“We certainly hope that a sensible compromise is reached within that next three weeks, and if not, then they’ll take up the idea some time later, recognizing they will have left quite a lot of money on the table.”

Follow Reuters Summits on Twitter @Reuters_Summits

(Additional reporting by Susan Kelly and David Morgan in New York; editing by Michele Gershberg and Matthew Lewis)

The company will offer health plans to about a dozen metropolitan regions in Texas, Florida, Tennessee, Arizona and Colorado, Chief Executive David Cordani said in an interview on Monday.

Under the Affordable Care Act, all states are due to begin selling healthcare to individuals through online marketplaces, with enrollment opening on October 1, 2013. Most insurers have said that they plan to participate in these exchanges in their existing markets.

Cigna, the No. 5 U.S. health insurer, had previously indicated that it planned to expand its business to sell on a limited number of exchanges in 2014 but had not given details. Most of Cigna’s health insurance business in the United States is administering benefits for corporations.

“We do not believe this is going to be a massive either top-line or bottom-line driver for the corporation. We think this is just a step forward for us,” Cordani said.

Cigna, which reported a better-than-expected first-quarter profit last week, sells health, life, disability and accident insurance and offers private Medicare plans for seniors and government Medicaid for the poor.

The deadline for applications to sell insurance in the 33 states that have chosen to have the federal government run the exchanges closed on May 3 after being extended a few days. Applications in many of the 17 states that are operating their own exchanges, such as Colorado, were due last month.

Texas, Tennessee, Florida and Arizona, where Cigna will offer plans, all defaulted to the federal exchange model.

With open enrollment due to start October 1, reform advocates have begun to worry about enrollment and how effectively federal and state officials can recruit consumers, particularly the young and healthy, from among America’s 49 million uninsured.

Official estimates anticipate about 7 million people will obtain private insurance through the exchanges in 2014 and that many will qualify for federal subsidies to help pay premiums.

The success of the exchanges will depend not necessarily on hitting the government target enrollment numbers, but on whether customers who use them can access doctors and like the insurance products, Cordani said.

But there are still many unknown factors, such as the details of the products on the exchanges and how affordable they will be, and Cigna has not set market share targets for 2016, he said.

“You’re going to have a meaningful market there if the exchanges are operating as designed over the long term,” he said.

(Additional reporting by David Morgan; Editing by Alden Bentley and Phil Berlowitz)

These new insurance marketplaces are due to open their doors
on Oct. 1 to enroll millions of Americans who have not been able
to buy coverage on their own.

A key principle of Obama’s health reform is that individuals
will have a robust offering of insurance plans to choose from,
and that competition for new customers in each state will help
keep prices down for consumers.

But health insurers, some of whom fought the law before it
was passed and continue to lobby to reverse parts of it, are
wary. In recent days, executives at the four largest U.S. health
insurers say they are likely to sell insurance plans on less
than a third of the exchanges, reluctant to venture out beyond
the states where they already offer coverage.

The U.S. Department of Health and Human Services, which is
overseeing the exchange effort, said that it is confident the
marketplace will be competitive.

“Many people will receive up-front financial assistance to
make insurance more affordable, plus many will be new or first
time customers for insurance companies,” said Erin Shields
Britt, a spokeswoman for the Department of Health and Human
Services.

There are a number of reasons for caution, company
executives say. These include a lack of clarity about the kind
of prices they can charge and the number of plans they can sell
on each exchange, the expectation that the program is only
expected to reach about 7 million people nationwide in its first
year and uncertainty over whether all of the exchanges will be
ready in time.

As a result, heavily populated states where many insurers
already sell plans now, such as California and New York, will
have competing products for the exchanges when health reform
takes full effect on Jan. 1. But states whose existing insurance
markets have little or no competition, like Alabama and Alaska,
may not see much of a difference, healthcare analysts say.

“We do think the uptake may be slower than maybe people
thought six months ago or a year ago in terms of what is going
on in the first year with the exchanges,” Aetna Chief
Financial Officer Shawn Guerin said in an interview.

Under the 2010 Patient Protection and Affordable Care Act,
often called Obamacare, health insurance marketplaces must be
available in every state in 2014. These exchanges, which will
enable all individuals and small businesses to buy health
insurance, are expected to bring in up to 24 million people by
2016, according to the Congressional Budget Office.

NO LAND GRAB ON EXCHANGES

UnitedHealth, the largest U.S. insurer, said it
would end up in as few as 10 exchanges and only up to 25
maximum.

Aetna on Tuesday said that it was not planning a “land grab”
when it comes to expanding through the exchanges and has
submitted applications to offer plans in 14 states.

WellPoint, which operates Blue Cross Blue Shield
licenses in 14 states, said it plans to enter exchanges in those
states, but that there is uncertainty around timing of the
overall rollout of exchanges. Humana Inc. said it is
participating in 14 states. Cigna said it will
participate in a “limited” number of markets that it has already
zeroed in on for growth.

WellPoint Chief Financial Officer Wayne DeVeydt said in an
interview that the company is still waiting to hear how the
states will handle pricing and ratings of applicants, how many
competitors will be allowed on the exchanges in some states that
plan to limit numbers and how many plans they can offer in
others that are more permissive.

States can choose whether to opt for a “clearinghouse” type
exchange where all insurers are welcome to apply, while others
have decided to take a more active role in choosing who can sell
plans.

DeVeydt described a race against time for insurers to have
all the information they need in the next two to three months to
finalize products, have them approved by regulators and inform
brokers of what they will be selling. “If you back it out from
October, you almost have to have clarity in the next 60 or 90
days, or you can’t have a (Jan. 1) rollout.”

DEADLINES DELAYED

The federal government has stuck by that Jan. 1 deadline,
even as it contends with the tight deadlines and technology
requirements to get the exchanges going. It has plans to run 33
exchanges, while 17 states have said that they will run their
own. On Tuesday, the government said it would give insurers
three more days to file their applications for the federally run
exchanges.

Last week, Gary Cohen, the senior official overseeing the
federal insurance exchanges, said 140 health insurance carriers
had started the process for an application, but did not provide
details on how they were distributed by state.

Secretary of Health and Human Services Kathleen Sebelius
said last month that she expected competition on the exchanges
in part because they will have lower administrative costs for
insurers and the marketing will be done by the exchanges.

“What I think we are going to see is a very different kind
of competitive market and that competition in and of itself
should help moderate prices,” Sebelius said during an event
moderated by Reuters at Harvard School of Public Health. “We
have seen that happen in the market in the last three years and
I think that is going to continue.”

Large states with vibrant markets and who are ahead on
setting up their exchanges, like California and Washington, have
received applications from dozens of insurance companies.

Still, states dominated by only one health insurer – places
like Alabama, Alaska and Delaware – could end up in the same
situation they are in now, according to health economists and
based on data from states whose application deadlines have
passed.

One possible outcome for the states dominated by few
insurers is that companies which administer the government’s
Medicaid plans for the poor will apply to provide insurance on
the exchanges, said Linda Blumberg, health economist at the
Urban Institute.

Consumers who apply on the exchanges for healthcare will be
able to find out online if they are eligible based on their
income for Medicaid or for a subsidy to buy private insurance.

Caroline Pearson, vice president for health reform at
consulting firm Avalere Health, said the barriers for insurers
are high to break into a new insurance market.

“To come in as a new carrier, do marketing to build your
brand name, and build a provider network from scratch is very,
very hard,” she said.

(Additional reporting by David Morgan in Washington, D.C. and
Sharon Begley in New York; Editing by Michele Gershberg and
Leslie Gevirtz)