A new survey from KPMG Government Institute finds state governments citing cost, political concerns and legislative uncertainty as big hurdles to planning and implementing state health insurance exchanges.

The exchanges are mandated as part of the Patient Protection and Affordable Care Act (PPACA), meant to allow the uninsured to obtain affordable healthcare coverage.

[See also: HHS issues final rule on insurance exchanges.]

The KPMG poll identified 212 separate provisions of the healthcare reform law that require state government action. By Oct. 1, 2013 states are required to have formed new organizations to operate the exchanges – including hiring and training staff, and implementing business processes and IT systems. The law says these exchanges must be operational by Jan. 1, 2014.

According to the survey, which was conducted last month among almost 80 state government respondents from varying departments, 31 percent cited cost as the primary challenge their state faces in planning the exchanges, with political concerns cited by 21 percent and uncertainty regarding the future of the legislation cited by 11 percent.

Asked about the main challenge in actually implementing the exchanges, cost and political concerns were tied at 27 percent and uncertainty regarding the future of the legislation was third at 14 percent.

“With states still dealing with tight budgets, it’s no surprise costs would be a key concern,” said Paul Hencoski, KPMG’s national health and human services leader, who advises states on setting up the so-called Health Benefit Exchanges.

“What’s interesting is the fact that a combined 32 percent of respondents indicated that either political concerns or uncertainty regarding the future of the legislation as the primary challenge,” said Hencoski. “This really highlights the difficult position many states are in as they try to determine the right path forward. The reality is that many states are reluctant to move ahead with so much uncertainty. However, waiting creates the risk that there simply won’t be enough time to have a state exchange operational by the 2014 deadline.”

Hencoski noted 62 percent of respondents say they don’t know the status of their organization’s current health insurance exchange development.

“This is not a surprising result and just underscores the overall uncertainty that exists,” he said, adding that some 26 states have challenged the act in court and about one third of states have not made substantial progress to prepare for the exchanges. “Many states may simply be waiting for the Supreme Court case about the PPACA to be argued this month, with a decision expected by summertime,” he said.

Respondents were also asked about what sort of resources they plan to employ in developing their exchanges and by far the most popular answer (given by 46 percent of respondents) was the use of internal resources along with a solution provider and an adviser. Far behind was "internal resources only," which was cited by 21 percent. Another 20 percent said ‘internal resources plus an adviser.”

[See also: HIX deadline ‘less than 600 days’.]

“This result clearly indicates that states plan to employ a range of resources to get the job done,” said Hencoski. “This makes good sense given that many states are already resource constrained and solution providers and advisers can bring other views and skill sets to the table, which can help state officials maximize their resources as they face critical decisions along the path toward implementation."

He added, however that, "no matter what resources they use … implementation will be a huge challenge for every state because for most states this has never been done before and the timeline for implementation is short."