Federally Facilitated Health Insurance Exchanges Will Differ From a State Run Exchange

By David Martin, President and CEO of VeinInnovations

Last week, I wrote about changes coming to our state’s health care system. Here’s a brief summary of last week’s column: In November 2012, Governor Nathan Deal wrote a letter to Kathleen Sebelius, the secretary of Health and Human Services, declining to create a state run insurance exchange. Georgia’s federally funded insurance exchange will open for enrollment in October 2013. This week, I’ll focus on how the federally funded exchange will differ from a state run exchange.

California, Washington, New York, New Mexico, Mississippi, along with 13 other states and the District of Columbia have chosen to create and run their own insurance exchanges. The exchanges states create will be the same as federally funded exchanges in broad details. Both state and federal exchanges will provide consumers four standardized coverage levels: bronze, silver, gold and platinum. In addition to the four standard plans, state and federal exchanges are required to offer a plan for young adults. The “young invincible” plan will be available to individuals under the age of 30.

3-Reasons-Why-Health-Insurance-Exchanges-Will-Flounder-in-2013States that operate their own exchanges have a great deal of leeway in determining what their exchange will look like. One example: how much insurers can vary premiums based on age or geography is controlled by rules in federal law, but states that create their own exchanges could adopt rules to make those rules more strict. States running their own exchanges will perform all exchange-related activities. That includes contracting with health plans, building the information technology infrastructure to assess eligibility and enroll individuals into coverage, as well as providing consumer outreach and assistance. States building their own exchanges will also be able to select insurers that offer benefits targeted to their particular needs. For example, a state with a high rate of obesity (like our own) could select insurers with special programs to combat obesity or diabetes.

In the states that have chosen to create their own exchanges, the respective legislatures are hard at work preparing to open for business in October. Mississippi was working on an exchange as far back as March 2012. (The story of Mississippi’s exchange deserves its own column, and you can read about it here and here if you’re interested.) Utah’s exchange is geared towards small businesses; Massachusetts’ exchange serves mostly individuals. Minnesota is working on an exchange that the state hopes will be a good balance between the paths Utah and Massachusetts have taken.

Details about federally funded exchanges (FFE) were not discussed much before the election. Since then, the Department of Health and Human Services has begun to explain their plans a bit more. Guidelines released in May 2012 revealed that the FFEs will contract with any health plan that meets all certification standards. Insurers have an April 2013 deadline to complete applications to participate in the exchanges.

In December 2012, the HHS released a 17-page question and answer document. It stated that the role and authority of FFEs will be limited to certifying and managing the participating qualified health plans sold in the exchange. The HHS says in the document that “States have significant experience and the lead role in insurance regulation, oversight and enforcement.”

Whether state or federally run, the exchanges coming in October are still taking shape. Over the next few months, we’ll see policy makers across the country and in Washington continue working to create a working model for the fall. According to the Affordable Care Act’s timeline, we’ve all got a deadline to meet – having health insurance – in January 2014.

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