Insurance chief sees summer 2014 opening of state’s business health insurance exchange
Gov. Phil Bryant’s blocking of the Mississippi Department of Insurance from working with federal officials on an individual health insurance exchange has not deterred the department from moving straight ahead with creating an exchange for small businesses — the key being the feds have no say in its creation.
“We may be able to roll it out in March,” Chaney said of what will officially be known as the Free Market Small Business Health Insurance Option.
The “Free Market” in the name denotes the absence of federal control of the exchange and federal subsidies for buyers on the exchange.
Three health insurance carriers have already committed, according to Chaney, who hopes to more than double number in coming weeks. “I’ll need anywhere from three to seven companies to pull this off,” he said.
As Chaney envisions it, the small business market exchange will be a destination for small businesses as well agents and brokers. Chaney conceded that whether it remains a destination or languishes and ultimately dies will hinge on pricing. “I think they will get lower-priced premiums,” he said in an interview last Friday.
“The reason would be that they are known risk pools,” he said of the potential small businesses that will buy on the exchange.
Like the individual exchange federal officials are creating for the state, the business exchange won’t succeed without wide participation by Mississippi’s small businesses, Chaney noted.
Unlike their larger counterparts, small businesses are not mandated to cover their employees or pay penalties if their workers buy on the subsidized individual exchange. But labor market pressures could force them to provide coverage as they compete for employees who can obtain coverage from large business employers or through federally subsidized purchases on the individual exchange.
Chaney acknowledged that the ramp-up to reaching the point of that pricing becomes competitive could take some time. “Since there are no fines on small businesses, they might be a little slower” to shop on the small business health insurance exchange, Chaney said.
Based on efforts elsewhere in the country and a range of regulatory uncertainties, the insurance commissioner may be too optimistic on his timing for opening the exchange, said Amanda Austin, director of federal policy for the National Federation of Independent Business. “It’s just too early too tell how” the small business exchange “is going to play out. I still anticipate there could be significant delays.”
Kathy Taylor, a commercial lines insurance agent and benefits consultant for the Jackson-based Nowell Agency, attributed some of the inertia to the magnitude of changes the health insurance sector is up against. “A lot of the carriers are trying to play catch up with all the rule changes,” she said.
Chaney, meanwhile, said he hopes to get federal permission to draw on portions of a $22 million grant the Department of Health and Human Services had granted the state to create the individual health insurance exchange – a project Gov. Bryant quashed by threatening to sue the feds and ordering the state Division of Medicaid not to work with HHS on the the exchange.
The Department of Insurance, Chaney said, “is in the process of re-scoping the grant terms and activities to continue use of the grant funds for other approved activities.”
Mississippi spent about $11 million of the grant funds on preparing the individual exchange before Bryant forced an end to the effort.
It’s unclear whether Bryant would block the use of any federal funds for the business exchange, though his hands-off order in regards to the feds could set up further conflict on the issue between Bryant and Chaney.
The Department of Insurance paid contractors on the individual market exchange up to the point the effort was dropped. Fortunately for the state, agreements with the contractors specified the contracts would terminate if the federal grant funds somehow became unavailable, Chaney said.