KEY DECISIONS AHEAD FOR THE EXCHANGE
Washington State is undertaking specific work to implement healthcare reform that deserves attention from employers. Specifically, while it is not receiving as many headlines as the pending U.S. Supreme Court case challenging the constitutionality of the 2010 federal healthcare reform law, the State’s efforts to establish an “Exchange” as part of the law will have critical impacts on the entire healthcare system.
The Exchange will fundamentally re-make the individual and small group markets for healthcare coverage. Exchanges are intended to provide consumers with centralized, online access to healthcare coverage products and, for individual consumers, access to federal subsidies to assist families with household incomes up to 400% of the Federal Poverty Level (approximately $90,000 for a family of four) with the purchase of coverage.
The State needs to make prudent implementation decisions to ensure the system functions as intended. Key areas we hope the State will navigate wisely include:
- Mandated benefits: Four benchmark plans identified by HHS for 2014 and 2015. States are allowed to select a single benchmark plan to serve as the standard for Qualified Health Plans, both inside and outside of exchanges.
- Administrative complexity: The Exchange should be focused on successfully carrying out the extensive requirements expected under the federal law before attempting to expand its operations and functions further.
- Stability in the individual market: The State should retain its high risk pool – for individuals with significant medical needs – in 2014 and beyond for current enrollees in the program. Carefully handling this issue would avoid unnecessarily displacing chronically ill high risk pool members as well as avoid an acceleration of medical costs in the individual market that would force a significant increase in premiums.
It is critical that we all keep in mind that the Exchange will dramatically reshape the market for individual coverage at the same time the individual market is expected to grow significantly. Estimates vary, but experts ranging from CMS to McKinsey say the individual market will grow nationally by 2.7 million to over 57 million people (or growth of the current market by 15% – 326%).
With that in mind, here are some prudent guiding principles for this work includes:
- Consumer Access: the Exchange should promote a broad choice of health plans for consumers.
- Competition: the State should create an even playing field rather than barriers to health plans participating in the Exchange equitably. The minimum requirements established by the federal law already provide a substantial framework leading up to 2014.
- Regulatory Efficiency: the Exchange should rely on the current oversight of the Insurance Commissioner to oversee premium rates, rather than add duplicative oversight.
While such concepts may sound simple, successfully implementing such a complicated government program will not be easy. Premera believes it’s important to take a thoughtful, balanced approach to this work.
These are some of the issues I’ll speak to at the panel on the Exchange at the State of Reform conference on the 4th. I hope to see you there.