State exchange plans must be approved by Jan. 1, 2013
WASHINGTON — California has become the first state to create a health insurance marketplace as envisioned under the national health reform law.
“Every state is going to have to have some sort of legislative action on this,” said Kansas Insurance Commissioner Sandy Praeger, chair of the Health Insurance and Managed Care Committee for the National Assn. of Insurance Commissioners.
The main purpose of health benefit exchanges is to make coverage more accessible and help make the process of obtaining it easier, according to a summary by the nonpartisan California Legislative Analyst’s Office. The exchanges must be operational by Jan. 1, 2014. The U.S. Dept. of Health and Human Services must certify state exchange plans by Jan. 1, 2013.
The insurance exchanges, a creation of the Patient Protection and Affordable Care Act, will serve as a portal to connect individuals with Medicaid, individual market and small group coverage to start, based on their income level. Individuals who earn up to 133% of the federal poverty level will be eligible for Medicaid. People earning between 133% and 400% of poverty will be eligible for private coverage subsidized on a sliding scale. The exchanges can offer large group coverage in 2017.
If states do not create an insurance exchange, the federal government will offer one in the state. But states strongly should consider building their own exchanges, Praeger said. This will help preserve local health insurance competition and allow the exchange to respond to changes in the local insurance market.
Many states have created health reform implementation task forces to offer advice on building health insurance exchanges, among other health reform tasks. Even some states suing the federal government to repeal the health reform law — such as Virginia — are studying health reform implementation, including benefit exchanges. States already should be thinking about how they’re going to integrate Medicaid and private insurance in the exchanges, or they will fall behind, Praeger said.
The health reform law’s benefit exchanges are based on a model adopted by Massachusetts in 2006. Utah followed suit by opening its own insurance exchange last year, although it is still being refined. Neither state’s exchange has been submitted for federal certification.
California became the first state to adopt a health insurance exchange as outlined in the health reform law in part because the Legislature was still in session to adopt a fiscal year 2011 budget after other state legislatures had adjourned. California Gov. Arnold Schwarzenegger signed the legislation on Sept. 30.
The health reform law outlines key roles for benefit exchanges. Among other things, the exchanges will certify that the health plans offered meet the federal law’s standards. The plans must have adequate provider networks, marketing practices that don’t discourage less healthy people from applying, and use standardized information formats, for example. The exchanges are required to operate a Web portal and toll-free phone number to advise consumers on their coverage options and plan costs.
The exchanges must identify employers to be penalized for not offering coverage to their employees and individuals who are exempt from the health reform law’s insurance mandate, which takes effect in 2014.