Destination Health Exchange: A Long Way to Go and a Short Time to Get There

Story appears in the 2013 Jan./Feb. issue of Capitol Ideas

Paula Flowers uses lyrics from a popular trucking song to describe the current situation on the establishment of health insurance exchanges.

States, she said, “have a long way to go and a short time to get there.”

Flowers, a former Tennessee insurance commissioner who now works as a consultant, said states can choose from three options under the federal Affordable Care Act—a state-based exchange, a federal exchange or the partnership model—but they’ll all arrive at the starting gate at the same time.

By mid-December, 18 states and the District of Columbia had opted to set up a state exchange, 18 defaulted to the federal exchange and six had opted for the partnership model, according to the Kaiser Family Foundation. That leaves nine states undecided with deadlines approaching fast.

While states may have missed their opportunity to operate a state-based exchange at this point, Chiquita Brooks-LaSure, director of coverage policy for the U.S. Office of Health Reform, said such an exchange is not completely off the table.

“If states are not ready in the first year but want to come in in future years, they certainly have that opportunity to do so,” she said.

But states still have the option of working with the federal government for a partnership exchange if they make the decision soon and submit a blueprint by Feb. 15.

Flowers thinks states, at the very least, should consider the partnership model because it allows states to maintain some control over not only the exchanges, but also other insurance-related issues.

In fact, Brett Graham, a partner with Leavitt Partners, which has a specialty practice on health insurance exchanges, argues that exchanges will not be the decision point on health care in the future—other rules coming out likely will pack a bigger punch.

“As we go forward,” Graham said, “these other insurance reforms are likely to have even more impact on your markets and the cost of insurance in those markets.”

States that defer to a federally facilitated exchange, he said, will have significantly less ability to control many of these other insurance reforms.

On top of that, Flowers said, insurers in each state will prefer some state connection to the exchange.

“Get ready for the hard-court press for a partnership exchange if you didn’t do a state exchange,” she said.

“This is an extraordinary amount of activity that is about to go on in the next eight months,” Flowers said. “It’s going to impact your insurance companies, your insurance regulators, the insurance brokers in your state and you as regulators.”

Terms to Know

  • Essential Health Benefits—This is the core package of services offered in a health plan. The Affordable Care Act requires plans to include 10 essential health benefits: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care.
     
  • Qualified Health Plan—These plans should provide high-quality coverage like that of a typical employer plan. To be certified by the exchange, health plans must meet minimum standards that are primarily defined in the federal law.
     
  • Small Business Health Options Program—This program, commonly called SHOP, will provide small employers with new ways to offer employee health coverage, better information, easier administration and access to tax credits that make coverage more affordable. It will allow employers to choose the level of coverage they will offer and offer the employees choices of all qualified health plans within that level of coverage.

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