Event Recap: Health Insurance Exchange Development: Innovation in the States

Valerie Manak contributed to this post.

A diverse group of stakeholders came together at the Bipartisan Policy Center’s event last week to talk about the progress of state health insurance exchange development.

[Watch event videos]

Former Senator Bob Bennett of Utah, a BPC Senior Fellow, kicked off the event and described how states are in a difficult position. They’re facing tight budgets, rising health care costs, and politically charged environments – conditions that make all policy changes challenging. New state health reform responsibilities only add to the list. Senator Bennett recalled what his friend and Senate colleague, former Tennessee Governor Lamar Alexander said during the health care reform debate: “any Senator who votes for the Patient Protection and Affordable Care Act (PPACA) should be condemned to a term as governor.” Senator Bennett, being from the exchange-embracing state of Utah, endorsed state exchanges but stressed that the difficulty of the task cannot be overstated.

Former Ohio Governor Ted Strickland, too, discussed the dire state fiscal conditions but argued that even in this difficult context exchanges present an opportunity. Increased transparency will promote competition among plans and providers and result in better consumer education and lower insurance costs.

Ray Scheppach, who just ended his 28-year service as Executive Director of the National Governors Association, likened health reform to other major federal policies that require state implementation. Encouraging the states to act as laboratories of democracy, Scheppach emphasized the possibilities embedded in exchanges. State governments are able to respond to local problems far quicker than the federal government. Because of this, Scheppach said, expect states to make mid-course corrections fairly quickly.

The panel of state representatives described the varying stages of state exchange development. Virginia, Maryland, and Washington are developing exchanges according to state laws that were recently passed. Linda Sheppard, however, discussed how Kansas is holding meetings with stakeholders and establishing workgroups in the absence of a mandated framework. Sheppard hopes that despite some opposition in the Kansas state House, this preparation will encourage the state to legislate a Kansas-created exchange instead of deferring to the yet-to-be-disclosed federal exchange.

Josh Sharfstein of Maryland described an exchange development process that is much farther down the road. With legislation already enacted to establish an exchange, Maryland is looking to study operational issues in a transparent, two-step process: solicit the opinion of residents, and legislate based on their findings. Jonathan Seib of Washington discussed similar progress. Currently, the goal for their already-legislated exchange is to get it done, get it done right, and get it done on time. He anticipates that Washington, too, will see legislation in the 2012 and 2013 sessions tweaking their exchange.

Virginia is an interesting case. Despite actively litigating the constitutionality of PPACA, Virginia’s legislature authorized the development of an exchange and appears committed to its success regardless of the law’s fate. Cindi Jones of Virginia shared that they are working closely with advisory councils and stakeholders to make decisions that will yield the best marketplace for Virginians. She stressed the importance of having a home-grown exchange.

The state panel was followed by a panel of industry experts moderated by Kaiser Family Foundation’s Larry Levitt. Where the states spoke of the need for flexibility, health plans, consumer advocates, and small employer representatives emphasized the need for balance between state discretion and standards that yield predictability.

Of particular interest were the potential discrepancies between the rules inside and outside the exchanges. Panelists expressed concern that fewer requirements outside of the exchanges would segment the market, with low-risk individuals getting coverage outside of the exchange, and the more expensive high-risk population seeking coverage inside the exchange. In a similar vein, they are all curious to see how the three Rs (reinsurance, risk corridors, and risk adjustment) will work. Kim Holland of Blue Cross Blue Shield America said she looks at the proposed rule as a request for information due to its vagueness.

The jam-packed event also featured Steve Larsen and Cindy Mann, two key Department of Health & Human Services (HHS) officials. They both stressed that HHS wants to do everything it can to provide guardrails for the exchanges, yet be flexible enough for states to control their own destiny – as the two panels demonstrated, this is a fine line. Mann outlined four tenets to this quest:

1. No one way – states should have the power to design and innovate
2. No wrong door – the system should be seamless so no matter how a resident presents to obtain insurance, they are directed to the proper option (exchanges, Medicaid, SHOP)
3. Alignment – rules should be as consistent across programs as possible
4. Simplify – the system should be easy to navigate and understand

Although she did not offer a concrete timeframe, Mann shared the prospect of a somewhat imminent release of the eligibility and enrollment regulation. While it may not be the next thing in the pipeline, we can be on the lookout for it sometime this fall.

Senator Tom Daschle concluded the event and reminded the crowd why they are working tirelessly to make the exchanges a reality: at least 24 million people that are uninsured or underinsured could get access to affordable coverage through exchanges. Exchanges will look different in different states, but he is optimistic that the basic intent will be fulfilled in each marketplace across the nation.

This event was attended by nearly 400 people in the audience, and hundreds more tuning in to the live webcast. The BPC Health Project will respond to the widespread interest in this subject by continuing to provide educational opportunities about state insurance exchange development. Stay tuned for next steps.