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Commonwealth brief examines three states’ progress in establishing Exchanges

Posted on July 18, 2012 | No Comments

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Implementation Briefs
Key Developments

California, Colorado, and Maryland were among the first states to enact legislation establishing health insurance exchanges under the Affordable Care Act (ACA). The Commonwealth Fund recently published a brief outlining differences in the states’ initial approaches: the numbers and types of people initially appointed to the boards governing the exchanges; the role of the board relative to the state legislature; how the exchanges interact with existing insurance markets; and the involvement of stakeholders in each state. The report also reviews the decisions that these states will face going forward, including how to finance the exchanges, how to make risk-adjusted payments to insurers for people likely to have high medical expenses, and how to avoid gaps in coverage and care for people who may have changes in income.

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As a wrap-up to 2013, The Commonwealth Fund has published a slew of studies and reports concerning the implementation of the Affordable Care Act (ACA). Several of these publications are highlighted below. The first publication, Realizing Health Reform’s Potential: How Are State Insurance Marketplaces Shaping Health Plan Design?, analyzes how state-based marketplaces (SBM) and state-partnership marketplaces (SPM) utilized their plan certification capabilities to enhance or alter the requirements for plans to participate in the marketplaces. The report examines the following certification areas: inclusion of essential community providers, benefit substitution, and provider networks. The second publication, What’s Behind Health Insurance Rate Increases? An Examination of What Insurers Reported to the Federal Government in 2012–2013, found that increases in healthcare rates from mid-2012 to mid-2013 can predominantly be attributed to medical trends, and a slight increase resulted from rate increases associated with the ACA. The third publication, Realizing Health Reform’s Potential: What States Are Doing to Simplify Health Plan Choice in the Insurance Marketplaces, discusses several policies employed by SBM to help simplify plan choices for consumers. Several of these policies include: incorporating meaningful difference standards (where a plan cannot be offered if it is too similar to one already in existence on the marketplace), limiting the number of plans or benefit designs an insurer may offer in the marketplace, and requiring standardized benefit designs.
A new Urban Institute analysis purports that insurance Exchanges are already exhibiting competition that will result in reasonably-priced premiums. Insurer Participation and Competition in Health Insurance Exchanges: Early Indicators Show Healthy Competition, funded by the Robert Wood Johnson Foundation, found that the six states studied have incentivized participation from multiple insurers and have relied upon market forces to drive down costs. Moreover, the report explains how the federal government may benefit from the approaches utilized by these states, as lower premiums correlate to fewer subsidies from the government in the form of premium assistance.  
A report released last week by the Congressional Research Service (CRS) examines the Health Insurance Exchanges under the Affordable Care Act (ACA). The CRS report outlines the required minimum functions of exchanges, and explains how exchanges are expected to be established and administered under ACA. The coverage offered through exchanges is discussed, and the report concludes with a discussion of how exchanges will interact with selected other ACA provisions.
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.
On July 19-20, 2012, the National Governors Association (NGA) convened 40 states and territories in Washington, D.C. to discuss a range of critical decision points and considerations related to addressing health system challenges. Over the course of two days, state officials exchanged ideas, lessons learned, and potential promising practices. Many states confirmed they are in different phases of implementation of two widely discussed provisions of the Patient Protection and Affordable Care Act (ACA) – Medicaid expansion and Health Insurance Exchanges. However, there is a high degree of uncertainty about the next steps for many states. Before committing to a particular course, states are weighing their options, factoring in additional guidance from the United States Department of Health and Human Services (HHS), and in some cases, awaiting the results of the next presidential election. Meeting participants also noted the need for greater state flexibilities and opportunities to guide the implementation of the ACA. Moving forward, states are interested in continuing to engage in meaningful discussions with HHS.
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.
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...
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.
U.S. Department of Health and Human Services Secretary Kathleen Sebelius announced today a new funding opportunity to help states continue to implement the Affordable Care Act (ACA). When the ACA is full implemented in 2014, the Exchanges will provide individuals and small businesses with a one-stop shop to find, compare, and purchase quality, affordable health insurance. HHS also issued further guidance today to help states understand the full scope of activities that can be funded under the available grants. The funding opportunity announced today will provide states with 10 additional opportunities to apply for funding to establish a state-based exchange, state partnership exchange, or to prepare state systems for a federally facilitated exchange. To date, 34 states and the District of Columbia have received approximately $850 million in Exchange Establishment Level One and Level Two cooperative agreements to fund their progress toward building exchanges.