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Our Health Care Future: Experimenting with Insurance Exchanges

On July 30, the Bipartisan Policy Center (BPC) hosted a group of experts to address the impact of the U.S. Supreme Court ruling on the Patient Protection and Affordable Care Act (PPACA). The keynote speakers and roundtable discussions focused on the future of the Medicaid program, insurance market reforms, and the political consequences of the decision. The third in a series, this blog post summarizes the forum’s insurance market reforms discussion, specifically focusing on PPACA’s state-based health insurance exchanges.

Background

PPACA establishes state-based health insurance exchanges to create a more organized and competitive market for individuals and small businesses to buy private insurance. The exchanges will offer consumers a choice of various federally-certified health plans along with information to help them better understand their options.

States are charged with implementing these exchanges in one of three ways: 1) setting up and running their own state-based exchange, 2) forming a partnership exchange with the federal government, and 3) opting for a federally-facilitated exchange operated by the Department of Health and Human Services (HHS). HHS requires all states to submit an “Exchange Blueprint” by November 16, 2012, outlining which insurance exchange option the state prefers, and will notify states of their approval status by January 2013.

Remarks from Center for Consumer Information and Insurance Oversight

Mike Hash, Acting Director of the Center for Consumer Information and Insurance Oversight (CCIIO) and Director of the HHS Office of Health Reform, opened his keynote address by highlighting CCIIO’s efforts to address the broken insurance marketplace through reducing health care costs and bringing more value and protection to consumers. Hash stated that 19 states now have the authority, through either legislation or executive orders, to establish state-based insurance exchanges. He described how CCIIO is “engaging states with technical assistance workgroups to hammer out issues across the exchanges including eligibility and enrollment activities, planned management, and consumer education.”

For states that have not elected to establish exchanges yet, Hash explained that, “While our preference has been for states to establish a state based exchange, giving them the maximum amount of flexibility to tailor those marketplaces to their needs… We realize that not all states will be ready to do so… [Therefore] we are setting up the infrastructure for federally-facilitated exchanges on track to go live by October 2013.”

Panelists on Insurance Exchanges/Reforms

Following Hash’s remarks, an expert panel featuring the following speakers examined the issue further:

  • Karen Ignagni, President and CEO of America’s Health Insurance Plans
  • Sabrina Corlette, Research Professor at the Health Policy Institute of the Georgetown Public Policy Institute
  • Becca Pearce, Executive Director of the Maryland Health Benefit Exchange
  • Sandy Praeger, Kansas Insurance Commissioner
  • Bill Hazel, Secretary of the Virginia Department of Health and Human Resources

Joel Ario, Managing Director at Manatt Health Solutions, moderated the panel. The panel outlined the varying perspectives and interests at stake for states implementing the insurance exchanges. Some highlights from the discussion are below:

Current State Efforts:

  • Ario observed that states have invested about $2 billion in PPACA implementation efforts so far, mostly for information technology development. He stressed that this meant the basic infrastructure for the exchanges is being built across the country.
  • Pearce detailed how, in organizing and implementing their exchange, Maryland “brought 66 Marylanders together to agree on the direction that the state exchange was going to go. At the end of the day hospitals, insurers, advocates, brokers, and consumers all agreed on what we needed to do for an exchange.”
  • As states work hard to meet HHS’s deadlines, Hazel articulated that having a couple more months would help from both a technology and business process standpoint. He expressed how ,“If you look at the business processes, we are going to stand up major, major corporations in each state called exchanges that have to do a variety of functions and get people hired and staffed up… Some of us have in good faith tried and still struggle in making it come together on time.”

Choosing the Best Insurance Exchange Option:

  • Pearce and Praeger agreed that states have strong incentives to move forward in implementing their own state-based exchanges. Praeger elaborated how in Kansas, “health plans tell us they would much rather have it be a state approval process [that would be] much less cumbersome than having to deal with two regulators [HHS and the state].”
  • Hazel interjected that, while states would generally prefer to run their own exchanges, many states like Virginia are grappling with the broader politics of the situation.
  • Ignagni remarked that “the administration has sent a strong signal that even in a federal exchange, they’re going to … depend upon the states to do the kinds of things that they do well.”
  • Ario reflected that state partnership exchanges might be the most likely outcome because they could serve as the ideal middle ground for states not ready to host their own exchange by 2014 yet also not thrilled about the prospect of giving full control to the federal government.

Affordability and Access:

  • According to Ignagni, “The Supreme Court decision was a crucial marker… because they affirmed the linkage between the market reforms and having everyone participate. Now… we need to turn our attention to affordability.” Affordability determines whether an individual will participate in the insurance pool, she explained. Getting everyone to participate in the insurance pool, particularly young and healthy people, is crucial to ensuring it actually works.
  • To help bring young people on board, Corlette stressed that “aggressive outreach is needed… as well as user-friendly exchanges that meet young people where they are at.” She also promoted the insurance exchange premium tax credits available in January 2014 as essential for insulating young people with relatively lower incomes from the impacts of high insurance costs.
  • In Ignagni’s view, the challenge is making sure that people don’t say “‘I’m going to pay the $95 penalty because that’s a lot less than the individual [insurance] costs…’ or a small business person doesn’t say ‘I’m going to drop coverage or not introduce it in the first place.’”

Recommendations for Policymakers:

  • Corlette suggested four main recommendations to policymakers: (1) don’t delay implementation; (2) invest in outreach and education (TV, radio, billboards, etc) to make sure individuals understand their rights and responsibilities under the law; (3) ensure insurance packages are adequate and affordable; and (4) protect exchanges against loopholes in the law that would allow for harmful business practices.
  • Pearce emphasized Maryland’s approach of directly engaging stakeholders for input on important exchange decisions as one that other states should emulate.
  • Ignagni underscored the importance of policymakers doing “everything [they can] to promote affordability to get everyone to participate in insurance.”

Regardless of which implementation path states choose, Hash reiterated the necessity to move forward on all fronts with PPACA after the SCOTUS ruling. He emphasized that “what makes this effort so urgent is that we’re dealing with an insurance system that has been broken and is not sustainable.” Will the new federal-state experiment of insurance exchanges be an answer to the major challenges facing our health insurance market? Find out starting January 2014.

View full event information and videos available here.


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