A project of the George Washington University's Hirsh Health Law and Policy Program and the Robert Wood Johnson Foundation

Commonwealth article addresses the first wave of Exchanges

Posted on July 26, 2012 | No Comments

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Health insurance exchanges form the backbone of the private insurance reforms called for in the Affordable Care Act (ACA), as they will create a marketplace in each state for small employers and individuals without job-based health insurance to buy comprehensive health coverage, with premium subsidies available for those with low or moderate incomes. As of May 2012, 13 states, together with the District of Columbia, had taken legal action to establish exchanges, through legislation or executive order. State implementing laws are essential to the translation of broad federal policies into specific state and market practices. Overall, the laws in the 14 jurisdictions vary, but they tend to show a common approach of according exchanges much flexibility in how they will operate and what standards they will apply to the insurance products sold. In all states, these “threshold policies” will be followed by policy decisions, expressed through regulations, guidelines, and health plan contracting and performance standards. A new Commonwealth Fund issue brief analyzes the choices being made by the jurisdictions to begin establishing exchanges.

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A new report published by Urban Institute describes the different roles states are playing in their respective federally-facilitated Exchanges (FFE). The Affordable Care Act (ACA) requires every state to host an online individual and small group insurance market, and states that elected not to set up their own Exchange defaulted to FFE. State-Level Progress in Implementation of Federally Facilitated Exchanges, funded by the Robert Wood Johnson Foundation, discusses three case studies of states that are implementing FFE, including the various responsibilities each state has undertaken and the challenges they are facing. Several states, for instance, are playing active roles in the development of their respective Exchanges, while one state is significantly behind as a result of political and administrative setback.
Yesterday, the Republican Governors Association sent a letter to the White House with requests regarding state-implementation of the Affordable Care Act (ACA). The Republican Governors, who will lead 60% of states starting in January 2013, asked for more time to decide whether they want to establish a state-run health exchange and for a meeting with the administration officials to discuss concerns regarding ACA implementation. Secretary Sebelius of the U.S. Department of Health and Human Services (HHS) sent a letter to all 50 governors immediately following the election extending the deadline for state-federal partnership or federal-run exchange establishment. However, states still must notify HHS by November 16 whether they plan to pursue a state-run exchange. The Republican governors requested more time to finalize their plans. They also posed 20 questions regarding exchange implementation and 14 regarding Medicaid expansion and stated that they would not be able to move forward unless the questions were addressed by HHS.
A report recently published by Price Waterhouse Cooper (PWC) examines states' progress on exchange establishment. The report found that the country, on the whole, is lagging. Only 13 states have decided to create exchanges, while eight have indicated that they will let the federal government take control of exchange establishment. The majority, the report says, are still undecided, and have until November 15 to make a final decision. The PWC report also details typical exchange participants. On average, they are 33 years old, unlikely to have a college degree, and under 200 percent of the federal poverty limit.
The Robert Wood Johnson Foundation (RWJF) recently released four reports jointly prepared by the Urban Institute and the Center on Health Insurance Reforms (CHIR). The reports track health reform implementation in ten states: Alabama, Colorado, Maryland, Michigan, Minnesota, New Mexico, New York, Oregon, Rhode Island, and Virginia. The latest reports focus on early market reforms, state insurance exchange development, insurance rate review, and plan participation and competition within the exchange. The first brief reports that early insurance market reforms are being implemented in all 10 states with the encouragement and efforts of state officials, insurers, and consumer advocates. The second report found that although exchange implementation progress varies widely across the states, many advocates, policymakers, and stakeholders have been highly involved in the process. The third brief found that most states seem to view the Affordable Care Act's (ACA's) insurance rate review provisions as an opportunity to foster accountability for insurers and educate consumers regarding rate increases. The fourth brief reports that markets with a dominant insurer or hospital are less likely to see augmented plan competition under the ACA. However, those without such a dominant plan will likely see increased competition, which could thus lead to lower-premium plan offerings.
Beginning in 2014, the health insurance exchanges created under the Affordable Care Act (ACA) will be available in every state as marketplaces for individuals without employer insurance and small employers. All plans will include the same package of essential health benefits, but will vary by four different levels of "actuarial value," or the percentage of medical costs that a plan pays for on average. The actuarial value of a plan will be indicated by the tiers of bronze, silver, gold, and platinum, and comparative information will be available to help people select plans. A new study recently published by the Commonwealth Fund looks at out-of-pocket costs that might result from plans with various designs and actuarial values. The study found that average out-of-pocket expenses decline as actuarial values rise, but two plans with similar actuarial values might result in different out-of-pocket costs for a given person. The overall affordability of a plan also will be influenced by age rating, income-related premium subsidies, and out-of-pocket subsidies, report the authors.
Beginning January 1, 2014, millions of previously uninsured individuals will gain access to health insurance coverage under the Affordable Care Act (ACA). On November 20, 2012, the Obama Administration proposed a series of regulations that move the nation significantly toward full implementation. These proposed rules will be analyzed at greater length in coming GPS Implementation Brief updates. In the meantime, this overview summarizes the major federal implementation matters that the Administration has recently released or is expected to address in policy or program implementation in the coming weeks and months as the 2014 full implementation date approaches. Together, these matters address...
Late yesterday, U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius extended the deadline for states to decide whether to run their own exchange until December 14, 2012. The Republican Governors Association (RGA) sent a letter requesting the extension to Sebelius on Wednesday November 14, 2012, just two days prior to the initial deadline. This is the second time in a week that the Secretary has made extensions to key Exchange deadlines, having also recently extended the deadline to submit the state-run exchange blueprint paperwork (also December 14, 2012) and the deadline of whether a state will choose to partner with the federal government on their exchange (February 15, 2013).
U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius today extended the deadline for states to submit Exchange Blueprint documents, until December 14, 2012. States must still notify HHS of their intent to pursue a state-run exchange by November 16, 2012, but now have an additional month to formally submit the Blueprint. Additionally, the deadline for states to decide on whether to pursue a state-federal partnership Exchange has been extended until February 15, 2013, a full three months beyond the original November 16, 2012 deadline. This decision by HHS should allow states more time to make crucial post-election decisions as to what kind of Exchange they intend to pursue, as well as allow the Administration more time to issue key regulations.
Today, the U.S. Department of Health and Human Services (HHS) announced six new health insurance exchange grant awards. The grants will go to Arkansas, Colorado, Kentucky, Massachusetts, Minnesota, and Washington, D.C. The federal support will aid the states and D.C. in creating the new exchange marketplace. D.C. received $73 million, Massachusetts $41.7 million, Arkansas $18.6 million, Minnesota $42.5 million, Colorado $43.5 million, and Kentucky $4.4 million.
Today, the Office of Consumer Information and Insurance Oversight, a division within the Centers for Medicare & Medicaid Services (CMS), released the final version of the approval for state-based health insurance Exchanges. An Exchange is an entity that both facilitates the purchase of Qualified Health Plans (QHP) by qualified individuals and provides for the establishment of a Small Business Health Options Program (SHOP), consistent with provisions under the Affordable Care Act (ACA). Exchanges will provide competitive marketplaces for individuals and small employers to directly compare and purchase private health insurance options based on price, quality, and other factors.