By Choice Administrators Exchange Services
With the passage of the PPACA (“ACA”), states are required to have a certified insurance exchange by Jan. 1, 2014, or risk defaulting to the national HHS Exchange. There is no consensus on how states will act relative to ACA implementation and many are not progressing with implementation plans as of this date.
Many states are looking for options to reconcile the needs of their states with the requirements of the law. These states desire regulatory flexibility to meet their state’s unique demographic, cultural, and business needs.
This white paper outlines a seven-step strategy to craft state-specific health reform measures that provide the right options to a state’s citizens and comply with the essence of the ACA.
State Specific Solutions for Individual State Needs
As complicated and controversial as the passage of the ACA was in 2010, its implementation in many states is proving to be increasingly complicated. States reviewing their obligations and timing deadlines under the ACA are now confronting the practical and political realities of having unique demographic, business, and cultural characteristics that require more attention than mere federal compliance.
State-specific characteristics necessarily impact the health care reform initiatives of individual states. Many states are looking for ideas to fashion the essence of ACA in ways that reduce the number of the state’s uninsured and improve overall access to health insurance while reflecting the special characteristics of their state.
CHOICE Administrators Health Insurance Exchanges, working with our strategic Exchange partners, believes there are thoughtful options for states in these circumstances.
Step 1 Adopt State-Specific Insurance Market Reforms
Increase citizen access to insurance coverage – a few considerations
- Eliminate medical underwriting
- Implement guaranteed issue and renewal
- Eliminate pre-existing condition limitations
- Allow dependent access to coverage to age 26
- Establish Adjusted Community Rating (ACR) with a 3:1 rate band
- Review existing insurance mandates with a view toward possible reductions in coverage
- Pursue market-based state Medicaid reforms
Step 2 Vest State Departments of Insurance (DOI) with the Authority to Determine “Qualified” Carriers and Health Benefit Plan Characteristics
- Consider “any willing” health plan which meets applicable state and Federal standards and is certified by the state DOI to be eligible to be offered in the Exchange
- Review benefit levels of “mini-med” plans and establish acceptable structures
- Avoid prescriptive selection process for health plan participation
- Promote “defined contribution” model for Exchange’s small group product
Step 3 Consider Using the State Exchange to Subcontract Eligibility Determination to State Medicaid Program
- Review functionality of legacy eligibility systems
- Review current eligibility processes
- Opportunity for consolidation of local or county eligibility processes
- Review impact of new federal subsidies on non-Medicaid eligible population
- Allows states to retain 90/10 financing from HHS
Step 4 Certify Licensed Brokers as “Navigators”
- Promote the state’s existing licensed insurance experts in certifying representatives or organizations as “navigators”
- Review compensation plans to ensure ACA compliance
- Where possible, align broker compensation with existing carrier broker compensation plans
Step 5 Contract with a Private Sector, Integrated Exchange IT Platform to Provide Enrollment Portal, Customer Service, and Operational Functions
- Lowers administrative cost due to economies of scale
- Consider a “software-as-a-service” IT application model to minimize state development costs and staffing, and to improve efficiency of Exchange operations
- Allows state Exchange staff to focus on outreach, enrollment, health plan rating, and other key activities
- Improves go-to-market timing
Step 6 Consider State-sponosored Independent Exchange Governance Model
- Establish Board composition
- Key representation from DOI and state HHS
- Key stakeholders for at-large appointments by Governor (e.g. broker, insurer, independent actuary, representatives of consumer, small business, insurer, and provider communities, etc.)
- Develop self-sustaining Exchange revenue model to support a minimal number of Exchange staff
Step 7: Establish State Legislative Oversight Committee to Supervise the Exchange
- Oversee Exchange and its interactions with other key state agencies
- Consider balanced representation of political affiliation and House and Senate members of committee. Legislatures in time-limited sessions may want committee to function between sessions
- Complex issues raised by the Exchange or committee could be resolved via “special” legislative session
State Based Health Reform – A New Opportunity for State Engagement
The ACA provides flexibility for states to address their own individual needs. We believe there are additional opportunities for states to address the development of their health exchange in ways which are consistent with their specific cultural needs and through our seven-step strategy. For example, it may be that a state selects five of these strategies while another state adds two more ideas overall. In any case, the goal is to provide states with ideas to craft health reform in ways that meet their individual and unique needs and avoid defaulting to the national HHS Exchange model.
We believe health reform will evolve to meet the complex and rapidly changing environment of health care in the United States. Further, we believe there will be increased flexibility for states to meet the requirements of the ACA and to craft health reform as a state-based solution.
Key Establishment Dates
About CHOICE Administrators Health Insurance Exchanges:
CHOICE Administrators is the nation’s leader in developing and administering health insurance Exchanges, with experience supporting integrated and proven Exchange models since 1996. Currently serving more than 10,000 employers and more than 150,000 members, and producing over 4.2 million Individual and Family Plan quotes in 2010, CHOICE Administrators, a member of The Word & Brown Companies, is the nation’s leading administrator of consumer-choice Exchange models.
- 2015 January: State Exchange is self-sustaining
- 2011 October: State-specific health reforms and Exchange enabling legislation is passed and signed by Governor
- December: Exchange Board appointed and Executive Director selected
- 2012 January: RFP for Exchange vendor(s) released
- April: Exchange services vendor(s) selected
- October: Exchange eligibility and enrollment functionality in testing
- 2013 January: HHS certifies the Exchange
- June: Systems testing completed
- September: Open enrollment begins
- 2014 January: State Exchange is functional