Fewer than half of U.S. states has chosen to create a state-based health insurance marketplace. Politics and time
constraints weighed heavily on decisions.
The federal government has mandated that all exchanges must include provisions for:
Ambulatory patient services
Maternity and newborn care
Mental health and substance use disorder services,
including behavioral health treatment
Rehabilitative and habilitative services and devices
Preventive and wellness services and chronic disease
Pediatric services, including oral and vision care
A pregnant pause hangs over Illinois. In a little shy of eight months many residents will be able to sign up for health insurance plans through a new statewide marketplace. There is little evidence that the state is prepared.
“If you made the decision to build your own exchange a year ago, you have enough time to do it,” said Sam Gibbs, senior vice president of sales at eHealthInsurance Services Inc. “There is just physically not enough time to do it now.”
Staffers from Illinois Gov. Pat Quinn’s office acknowledged that it would be difficult to implement a state-based exchange on the timetable laid out by the federal government. They nevertheless reiterated that the state’s goal is to implement a completely state-run exchange by 2015.
The lack of preparation is all the more embarrassing in the Land of Lincoln, or more aptly Obama, where the president’s close ties add pressure to successfully follow through on what is arguably his greatest legislative legacy. Illinois is way behind California, for example. The Golden State was the first to pass exchange legislation only six months after the enactment of federal health reform.
The federal Patient Protection and Affordable Care Act, signed into law in 2010, requires each state to provide a health insurance marketplace, also known as a health insurance exchange, where residents can compare rates on policies.
Although the median household income in Illinois is $56,576, there are still more than 1.8 million uninsured residents, or 15 percent of the state population, according to the Henry J. Kaiser Family Foundation.
The insurance exchanges offer a way for those Illinoisans to finally find coverage, says Jennifer Sullivan, director of the Best Practices Institute at Enroll America, a Washington-based nonpartisan organization promoting enrollment in health-care insurance plans. Americans will be presented with a new range of affordable health insurance solutions and “some employers will have options they didn’t have before,” Sullivan said.
Under Obamacare, states were given three ways to comply with the new regulations: initiate a state-based marketplace, default to a federal marketplace or enter into a state-federal partnership.
A surprising majority of states, half of them to date, have opted to rely on the federal backstop. Of those, 22 are currently presided over by Republican governors. Only 19 have chosen the state-based model.
Illinois is one of seven states planning on a state-partnership marketplace. The hybrid strategy splits the work and expense of implementing marketplaces between the federal and state governments, easing a process that has left many states scrambling for time.
Some critics of Obamacare are skeptical any of the options will solve the problems of uninsured residents.
For Brian Matos, deputy communications director for the Chicago GOP, the uninsured population is largely made-up of low-income families for whom the exchange will be of little consolation.
“If they had enough money to buy insurance on the private market, they probably would have done so,” Matos said. “The exchange won’t do much to help them if they can’t afford even the lowest price coverage for catastrophic care.”
By the Oct. 1 open enrollment deadline, marketplaces must be fully operational in all states. About three months prior to that, health insurance providers need to have developed their specific insurance plans and submitted them for approval by the state. All the information must also then be digitized, according to Gibbs.
For states like Illinois that hope to eventually run its own exchange, the partnership will serve as a starting block.
Under this state-federal model there are three options that states can choose from: state plan management, state consumer assistance and both plan management and consumer assistance.
Illinois is pursing the latter dual option. Within this arrangement, the state will help choose the insurance providers that can participate in the exchange, oversee in-person assistance and manage the program that assists consumers during insurance registry. Illinois also will take charge of marketing and educating residents on the services provided by the exchange.
Though the state plays an important role, the federal government will serve as the backbone for Illinois’ health insurance exchange, at least until 2014. It will operate call centers, fashion the eligibility application, create and manage the state exchange website, oversee written requests for assistance and make sure the exchange meets required standards.
“Illinois gets to take a baby-step, if you will, with a partnership exchange,” Gibbs said.
Regardless of federal involvement, all marketplaces will be state specific, and a key factor in each will be the benchmark plan – an insurance plan with a set of benefits that determine the minimum level of care that all participating health plans must cover.
The benchmark plan requires providers to meet a baseline for quality care at affordable prices and ensures consumer access to key health-care services including hospitalization, prescription drugs and mental health services.
Illinois’ benchmark plan was announced in September 2012. It’s called BlueAdvantage, a small group plan that is offered by one of the largest health insurers in the state, BlueCross BlueShield of Illinois.
Mary Ann Schultz, senior manager for public affairs at BlueCross BlueShield Illinois, said the company doesn’t have a price for the benchmark plan yet but will by fall.
Illinois’ choice of essential benefits in its benchmark plan will be one deciding factor for carriers who may apply to enter the state marketplace. “Payers are really looking at the criteria to decide if they want to be involved,” said Shandon Fowler, director of product management for Marketplaces at Benefitfocus.com Inc., a health-care benefits technology company in Charleston, S.C.
But there are clear benefits for insurers. “This is a very big expansion in their business,” said Sheryl Skolnick, analyst at CRT Capital Group LLC in Stamford, Conn.
Nevertheless, providers are cautious. Minnesota-based UnitedHealth Group plans to enter 10 to 25 exchanges next year, according to Skolnick. This low number reflects the potential liabilities of taking on hundreds of uninsured Americans, which widens the risk pool for UnitedHealth, she said.
Limited data on the health issues faced by the uninsured population make it difficult for insurance companies to estimate the risk. Companies say there’s no way to know how many unhealthy people they will be required to insure in 2014.
“This has not been done before. This is a big piece of legislation which is being implemented in a very short time frame,” said Sanjay Singh, the co-founder and CEO of hCentive Inc., a Virginia-based technology solutions company helping simplify health care systems. “Typically when you do a project of this size if things are not clear or things change then the deadline can move. That’s a luxury not available for states rushing to conform.
Nevertheless come Oct. 1, Singh is sure states including Illinois will have operational exchanges. What is not yet clear is how complete the solution will be.
“It may not be everything lined up as you would like,” Singh said. “But basic, core functionality where customers can come and shop and start to enroll, I think that functionality will be delivered by this timeline.”