Commonwealth paper examines Exchanges, discusses challenges

Posted on October 1, 2010 | No Comments

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A new paper by Professor Timothy Jost and funded by the Commonwealth Fund examines health insurance exchanges and offers insight into 8 difficult issues that face 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.
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.
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 White House recently released a memo detailing health plan competition and choices anticipated to be available under the Affordable Care Act's (ACA) health insurance Exchanges. According to the memo, 75% of states with federally-facilitated insurance markets will have at least one new insurance carrier enter their market. The White House memo also reported that 90% of target enrollees will be able to select plans offered by a minimum of five insurance companies. These findings were compared to the current individual insurance market, where two or fewer insurance companies control the market in most states. The memo confirms that state-specific rates will not be released for federally-facilitated Exchanges until September.
The Center for Consumer Information and Insurance Oversight (CCIIO), a division of the Centers for Medicare and Medicaid Services (CMS), recently posted new guidance concerning federally-facilitated and state-based Exchanges (Marketplaces) established under the Affordable Care Act (ACA). The guidance purports that if states do not adhere to and enforce the requisite standards for health insurance issuers in federally-facilitated Exchanges, then CMS intends to coerce enforcement through civil penalties and plan decertification. CMS does not believe that decertification will be a common occurrence. In addition, the guidance stated that qualified health plans (QHP) paired with health savings accounts (HSA) must meet the cost-sharing reduction standards that apply to low income-individuals. CCIIO published additional guidance that expands upon which activities, in both federally-facilitated and state-based Marketplaces, that qualify for grant funding under ACA Section 1311. For instance, state-based Marketplaces are not permitted to use this funding for navigator outreach and education, yet they are allowed to use Section 1311 funds for "in-person assistance programs."
The Centers for Medicare and Medicaid Services (CMS) today released a proposed rule on benefits and payment under the Affordable Care Act (ACA). The proposed rule outlines how CMS plans to run federal exchanges and suggests how risk adjustment data should be collected. The rule also lays out the three-year transitional program that the federal government will run to maintain premium costs in the individual market, and projected that premiums will be 10 to 15 percent lower than they would have been without the reinsurance program. With regard to the reinsurance program, CMS said that federal exchanges can impose a user fee on health plans to finance the exchanges. However, to prevent the user fees from making the health plans less attractive, CMS is asking the Office of Management and Budget (OMB) to exempt the requirement that those fees cover the whole cost in 2014. Before 2014, it wants to cap the monthly fee rate at "3.5 percent of the monthly premium charged by the issuer for a particular policy under the plan." The goal of the rule is to stabilize the new exchange market, limit risk, and smooth over the transition. Comments on HHS’s proposed rule are due December 31.
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 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.
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...