The Clock is Ticking

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Envision your state's health insurance exchange, a major component of the Patient Protection and Affordable Care Act (ACA), as a door. You open the door and are then presented with other labeled doors; these are your options for health insurance coverage, organized by actuarial value and plan details into bronze, silver, gold and platinum categories. You can open any one of these doors and look at what is on the shelves - details and costs of many different health insurance plans.

If you could see behind those shelves, you would see numerous people, desks, computers and departments supporting this marketplace. All the details of creating, building and educating the public about a health insurance exchange represent a multi-faceted effort that, depending on your state, includes federal and/or state government and many different insurance companies.

A Refresher Course
Health insurance exchanges, or marketplaces as the Department of Health and Human Services (HHS) began calling them in mid January, are the major vehicle by which people will be able to buy health coverage under the ACA. When insurance policies purchased from marketplaces - operated by the state, federal government or a combination of both - go into effect Jan. 1, 2014, about 9 million uninsured Americans, 7 million by Medicaid, will be covered. Marketplaces must be ready to sell their wares to consumers Oct. 1 of this year.

Since the ACA was signed into law March 23, 2010, it has undergone several clarifications and adjustments and further tweaks are expected. Meanwhile, the clock is ticking. States and the federal government have eight months left to get marketplaces up and running so consumers can begin to shop for insurance.

Some aspects of the law are already in place, such as requiring children be covered on their parents' insurance until age 26, and increasing the Medicaid drug rebate for brand-name drugs to 23.1%. Others, such as a prohibition on excluding people from health insurance because they have a pre-existing condition, will go into effect Jan. 1, 2014.

When in place, the law stipulates all people must have health insurance or be subject to incrementally increasing tax penalties. However, on Jan. 30, the Obama administration emphasized exemptions to this part of the law, saying the mandate penalty "applies only to the limited group of taxpayers who choose to spend a substantial period of time without coverage despite having ready access to affordable coverage," according to HHS.

ACA also provides for some insurance payment subsidies if a consumer is unable to afford to purchase his own insurance, but is not eligible to receive Medicaid.

To level the playing field for consumers buying insurance, the ACA requires all insurers provide benefits in 10 essential categories, including maternity/newborn care, and pediatric services, with oral and vision care coverage.

State, Federal & Partnered Exchanges
When the ACA passed, every state was encouraged to run its own insurance marketplace. To date, 17 states plus the District of Columbia have indicated they will run their own exchanges; two states are planning state/federal partnerships. According to HHS, it is too early to determine how many states will default to a federally facilitated marketplace (FFM) since the deadline to submit a blueprint for state partnership was Feb. 15. However, in 2012, several states, such as New Jersey, Louisiana, Wisconsin and Pennsylvania have indicated they will default to FFMs.

"Consumers won't see any difference in how they apply for insurance, no matter who is running the exchange," an HHS spokesperson told ADVANCE. "However, state-based marketplaces offer states more flexibility in how they run their exchange.

"With a state-based marketplace, states get the flexibility to determine which insurers can participate in the exchange," elaborated the HHS source. "They have the responsibility of enforcing the rules of the market and they are able to decide a number of operational details for the marketplace; for example, how people apply for coverage; how they want to manage plans and how best to educate consumers about the marketplace. Our view is state's know their population best."

Managing Marketplaces
That brings up several questions.

Question: In a state with an FFM, what happens to that state's ability to regulate insurance in its bailiwick?

Answer: "Insurance has long been regulated at a state level, and just like they do today, states will continue to retain the control they have and will be able to regulate insurers outside an FFM," the HHS source said.

Question: Who then manages an FFM?

Answer: "We plan to collaborate with states as much as possible," HHS stated.

Question: So could the state then decide to take over its FFM after it is up and running?

Answer: "States have been and will continue to be partners in implementing the healthcare law; . . . a state may apply at any time to run a marketplace in future years," the source explained.

Question: Can an insurance company opt out of participating in an ACA marketplace?

Answer: "Our members are in the business of providing coverage and want to offer coverage," said Robert Zirkelbach, spokesman for America's Health Insurance Plans, a national trade association. "Some states are saying that the only insurance that can be sold in that state must come through the exchange. DC is one. We don't support that because if an individual finds a policy that meets their needs, they should be able to buy it, no matter where that coverage is offered."

Public Support
Throughout this process, many entities have weighed in critically or supportively on the ACA and its marketplace plan, sometimes along party lines. For example, in a statement issued after the GOP's bid to repeal the new healthcare law failed in the U.S. Senate along party lines, Republican Sen. Ron Johnson (WI) said the healthcare law is "the single greatest threat to our freedom in my lifetime." Also, any states that already have indicated they intend to opt out of forming their own exchanges are headed by Republican governors.

Whatever they are saying or doing, the general public puts this initiative above all others, according to a recent survey by the Kaiser Family Foundation, the Robert Wood Johnson Foundation and the Harvard School of Public Health. The poll, released Jan. 24, shows most Americans (55%), irrespective of Democratic or Republican affiliation, feel the creation of state-based health insurance exchanges should be a top priority for health policy in their state.