One of the most talked-about provisions in the Affordable Care Act is the creation of health insurance Exchanges to help people and small businesses get coverage. HHS recently released their Initial Guidance to States on Exchanges, which gives you the basics, but how do you actually decide what to focus on in creating an Exchange?
Community Catalyst is here to help. Based on our work on Exchanges over the past few years, we’ve developed a Top Ten Priorities for Health Insurance Exchanges.
Here’s an abbreviated list to get you started:
1. Should Your State Operate an Exchange? First, advocates need to decide whether you want your state to run the Exchange, or defer to the federal government. While it makes sense for most states to create their own Exchange, this may be more difficult in states with hostile political environments. Right now, we don’t know much yet about what the federal Exchange will look like. So for now, states should focus on creating a state-run Exchange, and revisit the federal Exchange question when more is known in the future.
2. Make Sure Consumers Have a Role No matter what your state’s political environment looks like, one of the most important concerns is the makeup of the board governing the Exchange. Consumers should be represented in a real way – meaning on the same terms, at least, as other stakeholders.
And the governing body of the Exchange governance should exclude representatives with conflicts of interest because of a financial stake in the health system — including hospitals, physicians, insurers, and brokers. California’s recent Exchange law has strong conflict of interest language for Exchange board and staff.
3. Let the Exchange Negotiate with Insurers A goal of the Exchange is to provide people with affordable, high-quality health plans. To do this, an Exchange needs the authority to negotiate with health insurers based on quality, premiums, and other factors (and not just accept all plans, like Utah’s Exchange).
At a minimum, a state should not require the Exchange to accept all insurers without any competitive process. In Massachusetts, the Exchange requires all insurers in the small group market to submit health plans, and has the authority to select plans based on “quality and value.”
4. Work Closely with Medicaid The state should create a “no wrong door” policy between the Exchange and Medicaid. No matter where a person initially applies, the state’s eligibility and enrollment system should ensure the person gets signed up for the appropriate program. Massachusetts uses a single application form for health coverage. The state then determines if the person is eligible for Medicaid or the subsidized plan through the Exchange. Your state will likely need to invest in information systems to update their system – luckily, states can now get a 90 percent federal match for money spent updating Medicaid eligibility systems, including work to coordinate with the Exchange.
5. Protect the Exchange from Adverse Selection Everyone is worried the Exchange will fall to adverse selection – that is, only people with serious health conditions will enroll and, therefore, it will become very expensive. The Affordable Care Act already does a lot to reduce the likelihood of adverse selection – insurers must use one risk pool for plans, essential health benefits must be offered in plans inside and outside the Exchange, and risk-adjustment will help even out the differences between the markets inside and outside the Exchange.
But these tools will not be enough if states do not apply the same rules to plans inside and outside the Exchange. To protect against adverse selection, states should require plans sold outside the Exchange to have the same benefits, cost-sharing, patient protections, and marketing rules as health plans inside the Exchange. States could also prohibit brokers from steering enrollees to particular plans inside or outside the Exchange.
Want more? For more detailed tips on Exchanges (and 5 more priorities!) see the new Community Catalyst paper, here.
— Christine Barber, Senior Policy Analyst