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Health Insurance Marketplace Readiness

  • 7 pages, published in October 2013
  • By Frost & Sullivan
  • Report Number: 1853235

Summary

Table of Contents

Beyond the Politics and Challenge of Implementation

Beginning October 1, American citizens who do not have health insurance will be eligible to purchase standardized insurance coverage using the new health insurance marketplaces, formally referred to as health insurance exchanges (HIX). This offering will be administered either by their state, federal government, or a combination of both. CMS has reported that 64 different types of projects supporting the establishment of HIX and the data hub have been funded through March of 2013. The following market insight, part 2 in our current series on this topic, discusses State readiness in response to creation of the marketplaces, including a US mapping presentation of where the different States are in their approach as of 9.17.2013.

Beginning October 1, American citizens who do not have health insurance will be eligible to purchase standardized insurance coverage using the new health insurance marketplaces, formally referred to as health insurance exchanges (HIX). This offering will be administered either by their state, federal government, or a combination of both.

A HALLMARK ELEMENT OF HEALTHCARE REFORM

The Patient Protection Affordable Care Act (PPACA), which was signed by President Obama in March of 2010 and then found constitutional in June of 2012 by the Supreme Court, contained a provision for creating health insurance marketplaces in each state. This landmark decision, written by Chief Justice John Roberts himself, mandated the creation of health insurance marketplaces for enrolling millions of people without health insurance. This legal interpretation of the Affordable Care Act forced an avalanche of health reform activity and sparked an immediate and ongoing debate in state capitols, Congress, and for the principal Obama administration healthcare reform policymakers, including Kathleen Sebelius, head of Health and Human Services (HHS), and Marilyn Tavenner, administrator for the Centers for Medicare and Medicaid Services (CMS). The Supreme Court left the choice to run and operate the health insurance exchanges to the states, rather than make it mandatory that each state must establish a health insurance exchange. It further stipulated that if states did elect to not stand up and operate a state-wide health insurance exchange, the federal government would step in and run it for them, a move considered to be a setback for the Obama administration.

The immediate task at hand for HHS and CMS was to put in motion guidelines and standards for states that wanted to run their own insurance marketplaces; procedures for states who would run the infrastructure of the exchange but wanted to partner with the federal government for assistance with the massive health IT eligibility and enrollment capabilities required; and finally, spell out what exactly the relationship between CMS, HHS, and state health officials would be for states wanting the federal government to set up and manage their insurance marketplace. What was clear to all participants was the significance of what is considered to be one of the critical components of healthcare reform, that is, enrolling 40 million to 48 million uninsured Americans using a public health insurance exchange. Coverage is to take effect January 1, 2014, and those who have incomes between 100% and 400% of the federal poverty level—or roughly $23,500 for individuals and $94,000 for a family of four—may be eligible for financial incentives on a sliding scale to offset monthly premiums.

Sebelius, who calls ACA “the law of the land,” has on more than one occasion since June of 2012 testified before Congress informing doubting legislators that her office “will be ready” come October 1 for open enrollment, which will run until March 31, 2014. But there are many, both lawmakers and industry analysts alike, who question what being “ready” actually means. Moreover, consumer polling finds very few Americans can explain the Affordable Care Act, and even fewer who have an inkling of their eligibility for federal assistance or what their state process for enrollment and eligibility for accessing the health insurance marketplaces will be.

HOW DID STATES RESPOND?

As 2013 approached, some 16 states and the District of Columbia opted to run their own version of the online health insurance marketplaces, with seven more choosing to establish a partnership with the federal government. The remainder of states chose to renounce any association with the Affordable Care Act and have elected to allow the feds to run their health insurance marketplaces. The majority of these same states also chose to not expand Medicaid, another key plank in the Obama administration’s healthcare reform legislation.

Understanding the impact of establishment of health insurance marketplaces beyond the political posturing as to who is responsible for actual enrollment has revealed several intricate mandates each state must deliver1:
(1) There must be two separate exchanges—one for individuals and one for small businesses—or one consolidated exchange covering both individuals and small groups in each state or region.
(2) The ability to purchase insurance through the exchanges will be restricted to US citizens and to legal immigrants who are not incarcerated.
(3) Health insurance plans will be available on four benefit tiers or levels—from the lowest, or “bronze,” level up to the highest, or “platinum.” There must also be a catastrophic plan for those who are younger than 30 or who lack access to affordable insurance.
(4) Premiums will be set according to adjusted community rating of risk and outside the exchanges for the non-group and small-group markets.
(5) Exchanges may contract selectively with health plans that are determined to be of high value based on cost and quality.

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