When it comes to federal health reform, or Obamacare, few aspects will have a greater potential impact on states than health insurance exchanges.
A centerpiece of reform, insurance exchanges are online marketplaces that will allow consumers to comparison shop between available health insurance policies. Think travel websites that make comparing different hotel or airfare deals easy.
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The controversial reform law calls for exchanges to be up and running by Jan. 1, 2014, but states must “demonstrate complete readiness” earlier than that. Federal grants are available to states to help with designing, establishing and implementing the exchanges, and some states have already made substantial progress moving forward with their exchanges.
The idea is to give states the flexibility “to design these marketplaces so they work well for their markets,” a federal spokesman told Bloomberg. (A “hybrid” exchange developed with input by both federal and state governments is a third option.)
But if states don’t take steps to set up their exchanges and don’t demonstrate readiness, the federal government will do the job for them. And that would be a very, very bad thing for states, according to various state government officials around the country. For example:
- According to Mississippi’s insurance commissioner: “It is important that we have an exchange that is designed by Mississippians. Operated by Mississippians. For Mississippians. We don’t want an exchange from the federal government that is one size fits all.”
- According to an Ohio Democratic lawmaker: “We can’t leave this to the federal government to make decisions for us.”
- According to a Minnesota nonprofit health insurer: “We have to constantly remind ourselves when we disagree that this will be done and none of us believe that the federal government can do this better than what we — its citizens — can do for ourselves.”
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The obvious question this brings up is: Huh? Said more articulately, why does it matter if an exchange is designed by a state or the feds? Either way, it’s simply a list of health insurance policies that a consumer can buy, so would it make that much of a difference?
As far as we know now, not really.
“Making a well-though-out assessment of what makes the most sense for states is challenging at this point because we don’t have all the information available to us,” said Amy Rohling McGee, president of the Health Policy Institute of Ohio.
The U.S. Department of Health and Human Services (HHS) issued a so-called “final rule” on exchanges, but a few things are still unclear. For example, there was no mention in the final rule regarding federal government intervention if a state does not show complete readiness by the 2014 deadline, Becker’s Hospital Review reported.
J.B. Silvers, a professor of healthcare finance at Case Western Reserve University, was more direct than McGee. He called the states vs. feds debate “a silly argument.”
“There are only so many parameters you can play with,” he said, saying it wouldn’t make much of a difference to the end user whether the exchange is designed by a state or the federal government.
However, McGee and Silvers each noted one issue that could vary from state to state: the role of health insurance brokers in exchanges. Each state gets to determine what role — if any — private brokers would play in their exchanges.
On the positive side for consumers, private brokers can answer questions, cut through confusion and help exchange users determine the best health coverage for them based on available options. On the negative side, there are concerns that private brokers would steer consumers toward more expensive plans.
Dennis Recker, chair of the legislative committee for the Ohio Association of Health Underwriters, said his group prefers the state-based approach to exchanges because it would give Ohio more flexibility in establishing rules around which insurance policies would be offered on the exchange.
“Consumers are more likely in an Ohio exchange to have a broad choice of health benefit plans that meet their unique healthcare needs,” he said. “A highly competitive market that is good for consumers is good for agents and brokers who serve those consumers.”
Another possible difference between state and federal exchanges centers on deciding exactly who is eligible to use them. States will be able conduct assessments of eligibility for Medicaid and the Children’s Health Insurance Program (CHIP), with the state Medicaid and CHIP agencies making final eligibility determinations, according to an HHS spokesman. But states already determine Medicaid eligibility, so this doesn’t seem like much of a change from current practices.
Nonetheless, to most users of health insurance exchanges, it’ll be rather trivial whether they were designed by a state or the federal government.
“It’s all just a big IT question,” Silvers said.
[Graphic from Kaiser Family Foundation]
