US to Clarify How Insurance Exchanges Will Work

Monday, 11 Jul 2011 11:28 AM

 

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WASHINGTON — States deciding whether to set up health insurance exchanges were expected to get more information today when the Obama administration reveals more on how these complex marketplaces will work.

The federal government so far has given few details on this transformative part of the healthcare overhaul passed last year, although it had suggested it would do so in the spring.

The lack of specifics has left states in the lurch. Amid heated political debate, they face a Jan. 1, 2013, deadline to decide whether they will participate in the program. If they do, they also have to create governance and information technology structures virtually from scratch by that time.

"States are most concerned about timeline right now," said Krista Drobac, health division director at the National Governors Association. "These regulations will help states see what is feasible between now and 2013."

U.S. Health and Human Services Secretary Kathleen Sebelius will reveal a framework for the insurance exchanges at a news event in a Washington area hardware store.

The idea behind the exchanges is to create easy access to an open marketplace of insurance plans and to allow uninsured people and small businesses to band together to negotiate for cheaper rates.

The states can create their own exchanges, get together and share infrastructure or entirely opt out of participation, in which case HHS would come in and do it all itself.

HHS has so far given few hints about how such federally created exchanges would look, adding to the reluctance of many state legislatures and governors, especially conservative ones, to commit. Although most Republican-run states reject the notion of supporting "Obamacare" reforms, they also have to consider the possibility of opening their state healthcare systems to more federal scrutiny if they refuse to set up the exchanges themselves.

All involved federal agencies have been tight-lipped about the actual timing and content of the coming regulations, but they should shed light on the requirements for eligibility and enrollment in the exchanges, premium tax credit regulation and Medicaid's place within the new framework. They will also detail guidelines for the exchanges in managing risk adjustment -- an effort to equally consider patients with various levels of medical needs.

In a Huffington Post blog previewing her announcement, Sebelius said the exchanges would share three key features: They will serve as one-stop shops for all insurance needs, guarantee competition between insurers based on price and quality, and ensure basic coverage.

"This is how Members of Congress get their health insurance today," she wrote. "And once these reforms are fully in place, buying insurance will become much more like buying a home appliance or an airline ticket."

 

FLEXIBILITY VS DEADLINES

The Affordable Care Act, one of President Barack Obama's landmark legislative victories, outlines initial guidelines for creating the exchanges, but leaves the states with what some see as tremendous flexibility for molding them.

For example, the law says a government agency or a nonprofit must run the exchanges, without saying where that entity should fit in the state hierarchy or how much independence and power it should have.

Others, however, see this flexibility as a threat to a timely rollout of the new healthcare framework, which has to be up and running by Jan. 1, 2014.

In fact, it has already slowed many states down, according to Edwin Park, vice president for health policy at the nonpartisan Center on Budget and Policy Priorities.

The provision about exchanges and the heated political tensions around the law itself, which is facing dozens of lawsuits questioning its constitutionality, have led to worries that states are falling behind the schedule.

The biggest concern "is having it ready to enroll people and pay bills by 2014," said Kansas Insurance Commissioner Sandy Praeger. No legislation is in progress in the state, and the conservative governor strongly opposes the law.

"The technology requirements are massive," Praeger said, "and if we don't have significant progress made by the end of the year, the IT experts tell us it's going to be really hard to meet the deadline."

So far, only 10 states have passed or enacted some sort of ACA-compliant legislation, according to Park's research. Seven states have pending bills, while legislation has failed, expired or been withdrawn or vetoed in 16 states.

However, many states are doing research and other work even without any approving bills, Park said.

Two states, Louisiana and Florida, have already said they will not set up their own exchanges, leaving the responsibility to the federal government.

© 2014 Thomson/Reuters. All rights reserved.

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