HHS Provides Clarification on Health Insurance Exchanges

From HHS:

A key point: states can construct an "active purchaser" exchange that bargains with health plans for the best deal and excludes those offering lousy deals, or they can follow an "open marketplace" model that basically posts plan offerings and leaves to marketplace forces rather than regulators the process of producing good deals.

Republicans may tilt strongly toward the latter model in the many states in which they will wield greater influence over state lawmaking after the recent November elections. But Jost notes that they won't be able to pass laws requiring the open marketplace model. Rather, the exchanges themselves will have the power to make that determination, so GOP leaders would have to make sure they have enough control over the exchanges to make sure they adopt the open marketplace approach happen.

The guidance documents the various powers states will have to shape exchanges the way they want. For example, they can decide whether to make the exchange a government agency or a non-profit entity; take part in a regional exchange rather than have just their own state exchange; limit access to employer groups of 50 or less until 2016; require competitive bidding for plans; require additional benefits; extend some or all exchange-related requirements to the outside market.

The guidance document also notes what states must do under the federal law, including certifying and decertifying plans; exempting individuals from the requirement that they carry coverage; rating plans on quality; putting benefits in a standardized format to ease comparison shopping; add determining eligibility for Medicaid and the Children's Health Insurance Programs, among a number of other responsibilities.

Regarding the NAIC model act—forwarded this week by the subcommittee that drafted it to a larger NAIC committee—perhaps the most controversial issue relates to the subject of requiring benefits in addition to those to be spelled out in federal rulemaking to meet the essential benefits standards. "Consumers are concerned that the states not be encouraged to repeal mandates before the essential benefit package is in effect," Jost blogged. Additional drafting may address the concern, he said.

Jost also noted that NAIC has left open the question of whether insurers in exchanges for small employers can offer traditional group coverage. If insurers were allowed to do so, and the employer shopping at the exchange picked traditional group coverage, the employer's workers would not individually have the freedom to pick their own plan from the exchange's menu of offerings—a freedom often touted by exchange advocates as a major advantage of these marketplaces.