Feds Sidestep Stubborn GOP Govs to Build Health Insurance Exchanges

By The Associated Press

Posted 9:34AM 08/07/12


WASHINGTON — Don’t look now: The feds may be outmaneuvering GOP governors who’ve balked at carrying out a key part of President Barack Obama’s health care overhaul law.

Opponents of the law say they won’t set up new private health insurance markets called exchanges. But increasingly it’s looking like Washington will just do it for them.

That means federal officials could be calling the shots on some insurance issues that states traditionally manage, from handling consumer complaints to regulating plans that will serve many citizens.

Unless Mitt Romney wins in November, that could turn into a political debacle for those dug in to fight what they denounce as “Obamacare.”

“You’re kind of rolling the dice if you think [Obama’s health care law] will go away,” said Kansas Insurance Commissioner Sandy Praeger, a Republican. If Romney either doesn’t win or does, but can’t make good on his vow to repeal the overhaul, “you are just giving up a lot of authority.”

The law envisioned that states would run the new markets, or exchanges, with federal control as a fallback only. But that fallback now looks as if it will become the standard option in about half the states — at least initially.

It would happen through something called the federal exchange, humming along largely under wraps on a tight development schedule overseen by the Health and Human Services Department in Washington.

Exchanges are online markets in which individual consumers and small businesses will shop for health insurance among competing private plans. The Supreme Court’s health care decision left both state exchanges and the federal option in place.

The exchanges are supposed to demystify the process of buying health insurance, allowing consumers to make apples-to-apples comparisons. Consumers will also be able to find out whether they’re eligible for new federal subsidies to help pay premiums, or whether they qualify for expanded Medicaid.

It’s all supposed to work in real time, or close to it, like online travel services. Open enrollment would start a little over a year from now, on Oct. 1, 2013, with coverage kicking in the following Jan. 1.

Eventually more than 25 million people are expected to get coverage through exchanges, including many who were previously uninsured. As exchanges attract more customers, competition among insurance plans could help keep costs in check.

But only 14 states and Washington, D.C., have adopted plans for their own exchanges: California, Colorado, Connecticut, Hawaii, Maryland, Massachusetts, Nevada, New York, Oregon, Rhode Island, Utah, Vermont, Washington and West Virginia. Some could still backtrack.

Kentucky and Minnesota are pushing forward with their own exchanges, and others may be able to partner with the federal government. States face a Jan. 1, 2013, deadline for Washington to sign off on their plans.

Meanwhile, development of the federal exchange is advancing.

HHS contractors are working feverishly to design and test computer systems that would make the federal exchange come alive. It’s a top priority for the Obama administration, which is guarding the details closely. Estimated price tag: at least $860 million.

The government is “on track in moving aggressively to set up this market structure,” Mike Hash, the HHS official overseeing the effort, told industry representatives, state officials and public policy experts at a recent Bipartisan Policy Center conference. “We’re on track … to go live in the fall of 2013.”

“I think the pressure is on them to deliver, and I fully expect they will,” said Jon Kingsdale, who was the founding director of the nation’s first health insurance exchange, created under then-Gov. Romney’s health care overhaul in Massachusetts.

Now a consultant to states, Kingsdale says he expects the federal exchange to look very much like the one already operating in his home state.

There will be a website, and you’ll be able to put in your ZIP code and get a list of available health plans. There will be a section where you can find out whether you qualify for subsidies, or whether you might need to look at Medicaid. There will be cost calculators to allow you to compare different levels of coverage: platinum, gold, silver and bronze. There will be tools that allow you to see whether your doctor or hospital is with a particular plan.

In an interview, HHS official Hash said the government is undaunted by the prospect of running exchanges in half the states or more.

“What we are talking about building here is a system that is really using 21st century technology, and it’s not dependent like in the past on bricks and mortar or how many (federal employees) you have,” said Hash. “Information technology produces the opportunity for efficiency. It’s much more easily scalable if you need to do it for a larger number of individuals.”

Paper applications also will be accepted. And Hash expects people will have plenty of help to navigate the system, from volunteers to insurers advertising to reach new customers.

Mike Leavitt pick may be signal on exchanges

Mike Leavitt pick may be signal on exchanges
By: Jason Millman, Politico blog
June 5, 2012 11:21 PM EDT

The selection of Mike Leavitt to lead Mitt Romney’s transition team doesn’t mean the Affordable Care Act’s health insurance exchanges are here to stay. But it is a reminder of how some Republicans, regardless of the ACA, have already been circling behind the exchange concept.

It also gives the health care world an idea of how exchanges could look under a Romney administration. In all likelihood, they’d be portals — the way Leavitt’s home state of Utah did them — and not much like the more active marketplaces of the Affordable Care Act.

News over the weekend of Leavitt’s involvement in a would-be Romney administration sent some on the right into near apoplectic shock that Romney would pick someone who’s profiting from ACA implementation. Leavitt’s firm is making millions advising states on how to design exchanges, the ACA’s state-based marketplaces that will deliver federal subsidies to purchase insurance and enable about half of the law’s coverage expansion.

But a President Romney would obviously still be the guy calling the shots, and of course he’s repeatedly stressed his dedication to blowing up the health care law on Day One and starting from scratch. His campaign again made that much clear following some weekend chatter over Leavitt’s role.

If a Romney replacement plan does surface, though, it’s possible that exchanges — an idea that has Republican roots — could be in the mix of options. And if exchanges were to be resurrected, they wouldn’t look very much like those in President Barack Obama’s health care law, if Leavitt’s and Romney’s own history with exchanges is any indication.

What’s more, that would be welcome news to some red states that for some time have liked the exchange concept but not its association with “Obamacare” or the prescribed requirements now coming almost weekly from Washington.

“Exchanges are going to be part of the future no matter what,” Leavitt told POLITICO in February. “The Affordable Care Act didn’t invent the exchange — we’ve been trying since the ’70s to get the small and individual group markets to buy insurance like a larger group. That has always been the problem, and the exchange will always be the solution.”

So what would a Romney/Leavitt exchange look like? Think “Utah” much more than “Massachusetts.”

In the same POLITICO interview, Leavitt said he would encourage states to pursue “free market” exchanges, like the one created in his home state of Utah, as a way for states to move forward.

That means throw out the individual and employer mandates. Scrap the federal subsidies to help people purchase individual coverage with a mandated set of health benefits.

The exchange would be a portal for employers to let their workers shop for and compare health plans with some premium assistance from their firm. Further, any health plan that met the state’s minimum requirements would be able to sell on the exchange. The so-called Utah model, which predates the federal law, has drawn considerable interest from Republican states.

That’s also the vision Romney had for small businesses to participate in Massachusetts’s exchange, which also predates the 2010 federal law and is considered the liberal bookend to the Utah exchange. Yes, Romney owns the state’s individual mandate. But as governor, Romney had vetoed the employer penalty for not providing insurance — which the Democratic-dominated Legislature in Massachusetts overrode — and he wanted employees in the exchange to choose their own health plan.

“Gov. Romney had envisioned the small-employer exchange to be more of a defined-contribution model, where employers would pay a certain amount of money and their employees could choose any plan they want,” said Amy Lischko, who served as Romney’s health care commissioner when the state’s 2006 health care reform law passed. Instead, the Massachusetts law was broadly written to leave major decisions to be made after Romney left office, and the exchange board opted against the employee-choice approach.

Even as Republican governors are hesitant to commit to an exchange before the Supreme Court renders its decision on the ACA, they have expressed support for the exchange concept. It’s easy to see how states could take on their own efforts even if the court throws out the national law.

Idaho Gov. Butch Otter, who launched a website to tout the many ways he’s “fighting ‘Obamacare,’” had pushed state lawmakers this year to establish an exchange, an idea that he says he favored well before the national law.

“Long before the passage of the law, Idaho was exploring ways to create its own exchange emphasizing free-market principles and creating a competitive marketplace that would improve access to coverage and keep insurance decisions between Idaho patients and insurance providers,” Otter wrote in December.

Michigan Gov. Rick Snyder is another Republican that favors a “free-market” exchange, with or without the federal law.

“Even if the act of establishing a health insurance exchange were not mandated by the ACA, I would still be in favor of utilizing technology to create a better customer service experience for Michiganders,” Snyder said in September. “Done right, the [exchange] legislation will allow customers and small businesses to make more-efficient and better-informed decisions about buying health insurance coverage.”


Right winning war on exchanges

from Politico
By: J. Lester Feder and Jason Millman
April 18, 2012 11:33 PM EDT

The Cato Institute’s Michael Cannon’s been racking up frequent-flier miles.

He’s dropped in on more than a dozen states to make the case to lawmakers that they should not lift one legislative finger to implement President Barack Obama’s health reform.

“It has been a fun ride,” he said.

Conservatives like John Graham of the Pacific Research Institute have also been touring states with the platform provided by the American Legislative Exchange Council to help kill off state-based exchanges, a key piece of health reform that will help millions of people purchase insurance coverage — often with federal subsidies — starting in 2014.

“Our approach has to be absolute noncollaboration, civil disobedience — well, not civil disobedience but resistance … by whatever means,” said Graham.

Two years into the law’s implementation, conservative emissaries have contributed to impressive stats. Almost all red states are holding off on exchange legislation at least until the Supreme Court decides on the Affordable Care Act, and in most of those states, exchange-building legislation has crawled to a stop.

Both funded partly by the Koch brothers, Cato and ALEC form the cavalry that state-based conservative organizations call in to convert Republican lawmakers who have been considering establishing exchanges. While they’re no fans of the federal law, many Republicans in state government thought it was better to set up their own exchange than to let the Department of Health and Human Services do it for them if the law survives past 2012.

Some still think that — and disagree with some of the assumptions and interpretations the fly-in conservatives are making. But Cannon and Graham are undeterred.

“Every time when I go into these states, there are usually a bunch of Republican politicians who have bought this line that creating a state exchange will protect them from Obamacare,” said Cannon. “It’s fun going in there and telling them, ‘No actually, if you want to protect your state, tell the federal government: … It’s your stupid law; you implement it.’”

In his view, state autonomy under health reform is a mirage. States won’t actually have much control because the federal rules governing the exchanges are so far-reaching. The sole difference between a state-run and federal-run exchange, he said, is that a state will have to “to pay for the privilege of having their autonomy taken from them” if they pass their own bill.

Second, he argues that if states don’t act, employers will be better positioned to legally challenge penalties they would have to pay if their employees end up getting subsidized coverage in the exchanges. Cannon contends that the legislation as drafted only allows the subsidies to be given through a state exchange — not a federal one. Most legal experts think this is a drafting error that the Obama administration can fix through regulation, but Cannon believes the courts will strike down any workaround.

One state where his message resonated was New Hampshire, which he visited at the invitation of the Josiah Bartlett Center for Public Policy, a free-market think tank.

The New Hampshire Legislature not only allowed a Republican-sponsored exchange bill to die this winter, but the House went a step further and passed a bill prohibiting the state from enacting an exchange shortly after his visit.

And according to Maine Democratic state Rep. Sharon Treat, Cannon’s New Hampshire visit had a chilling effect across the state line. She had been in talks with some of her Republican colleagues about an exchange bill. That stopped.

“Now, they’re advancing the idea of don’t do anything, because we don’t want to help President Obama,” the Maine Democrat said.

This is exactly what the national conservative organizations had hoped for.

“It took a lot of people like Cannon and me and certain legislators to give some backbone” to lawmakers uncertain about drawing a hard line against exchanges, said Graham.

Graham said that national health experts are a vital resource for grass-roots groups, most of whom do not have health care experts on staff. He, for instance, recently visited the Idaho Freedom Foundation.

“They have to outsource,” he said of the local organizations. “Grass-roots liberty groups, tea party groups call us and say, ‘What are the reasons to oppose an exchange again?’”

These efforts get a boost from another Koch-aligned group, Americans for Prosperity, which is trying to fight off exchanges in eight states. These efforts are mostly kept in-house, without help from outside groups.

“We work with the policy shop in D.C. a lot to make sure we’re on top of the 644 pages” of final exchanges rules, said Teresa Oelke, director of AFP’s Arkansas chapter. “I think that is the largest point against the exchanges. We’re signing up for a program that we’ll have to pay for by January 2015, but the federal government has control of every single decision.”

The approach of these national organizations has reflected sophisticated lobbying know-how, suggested Alabama Republican state Rep. Greg Wren, who is co-chairman of the National Conference of State Legislatures Federal Health Reform Implementation task force. Though an ALEC member, Wren is one of the main Republican voices arguing that lawmakers who opt for doing nothing and open the door to a federal exchange are putting their state sovereignty at risk.

“They’ve targeted … leadership, committee chairs, and oftentimes, people in those positions can stop or speed-bump any kind of legislation,” Wren said.

Cheryl Smith also thinks the work by Cato and ALEC to derail exchanges looks reckless. She’s a former Heritage Foundation staffer who now directs the exchange practice of the consulting firm Leavitt Partners, which advises several red states trying to figure out how to handle the reform law.

Many legal experts doubt Cannon’s analysis of the health law, she said, and it’s risky for state lawmakers to leave their state’s future up to uncertain interpretation.

“He may be right, but if you’re a state policymaker, do you really want to bet the farm on that?” she said.

The Incidental Economist on H.C. Exchange

What will consumers make of health insurance exchanges?

I and many others lament that the new health insurance exchanges won’t be operative until 2014. Millions of uninsured Americans need help now. It’s heartbreaking that so many need to wait.

In part, exchange implementation was delayed to hit ten-year budget targets valued by moderate and conservative Democrats. Yet implementation was delayed for other reasons, too. Elected officials and policymakers understood that there will be a myriad of political and administrative challenges—not to mention various administrative glitches–as the new exchanges come online. Behind closed doors, many Democratic office-holders were happy to see these challenges and glitches put off beyond the 2012 presidential election.

The challenges and glitches won’t arise because the Affordable Care Act was poorly crafted; they will arise for other two reasons, called to mind by a recent story in the conservative webzine Daily Caller. First, one must implement really complex regulatory and assistance policies across fifty states. And because health reform is the centerpiece initiative of a Democratic president, it will be implemented in a politically polarized environment that will permit few administrative fixes. That’s a reality of American politics.

Second, we don’t exactly know what millions of Americans who will participate in the new exchanges will think about the insurance they will secure. Exchanges will be a balm for the medically uninsured, previously-uninsured people, and for many others paying high administrative costs and (perhaps) extra premiums due to health difficulties in the individual and small-group market. If you wonder whether this is a real problem, visit the cancer ward of any large public hospital.

The economic and political calculus will be more complicated for millions of others: people now gambling by going without coverage, relatively healthy people (especially those under 30) who will now pay community-rated premiums to support coverage, millions of others who may pay a bit more in premiums because they will be purchasing a richer package of coverage that will actually cover an essential package of care in the event of costly illness.

Myles Miller, writing in Daily Caller, highlighted these issues in a recent story, pugnaciously titled: Obamacare architect: Expect steep increase in health care premiums. Last year, officials in Wisconsin, Minnesota, and Colorado hired Gorman Actuarial and noted MIT economist Jonathan Gruber to help examine the impact of ACA on health insurance markets. Drawing on a Powerpoint presentation prepared in Wisconsin, and companion pieces for Minnesota and Colorado, Miller writes that these reports “offer a drastically different portrait in 2012 from the one Obama painted just 17 months ago.”

These Powerpoints are worth reading alongside Miller’s original story. Not surprisingly, Miller focuses on the politically unpalatable findings:

During his presentation to Wisconsin officials in August 2011, Gruber revealed that while about 57 percent of those who get their insurance through the individual market will benefit in one way or another from the law’s subsides, an even larger majority of the individual market will end up paying drastically more overall.

The Daily Caller’s Miller underplays more favorable findings. On average, the financial benefits to those whose premiums will decline are larger than the changes for those whose premiums will rise. After accounting for affordability credits, average premiums fall in each state.

As Gruber notes by email, “ALL of this analysis refers only to those who were already buying nongroup insurance.  It completely ignores the enormous reduction in premiums for people who were shut out of the market because they were sick.”

Miller’s piece also exemplifies the partisan divide in its limited discussion of the uninsured. The word “uninsured” occurs once, in a quote from Gruber. Yet all three Powerpoints note dramatic declines in the ranks of the uninsured and the large average financial transfers to households that join the new exchanges. In Wisconsin, the ranks of the uninsured are projected to drop by 65%, (340,000 people). The corresponding projections for Colorado and Minnesota are 55% (480,000 people) and 58% (290,000 people), respectively. I didn’t see household finance numbers for Wisconsin. The average estimated financial impact of the exchanges in Colorado was $790 per family. In Minnesota, the comparable improvement is $500 to $700 per household.

Gruber adds an especially interesting wrinkle, noted in an email to the Daily Caller he graciously forwarded to me:

CBOs analysis did not account for states folding their high risk pools into the exchanges, but in each of these three states that happens. So for example in Minnesota this is about a 15% rise in rates, which explains most of the increase. But it is important to remember that states are currently spending a lot of money to support these high risk pools (more than $100 million in MN).  If this money were instead directed to the exchanges, it could greatly reduce any premium impact [from] merging in the high risk pools.

Once again, those high risk pools bring mischief in health reform. These pools include highly- concentrated groups of individuals with costly and complex health concerns who may be quickly folded in the new exchanges, even as these exchanges incorporate millions of uninsured and other participants entering from the small-group and individual insurance markets.

Miller’s piece rather crudely frames health reform from the perspective of its political opponents. It still raises important points. The political and perceptual issues it raises are fundamental in health reform. Millions of people will join health insurance exchanges. Most will be relatively healthy. They will see certain relatively small and immediate things, such as contraceptive coverage and clinical preventive services. They will not (yet) experience chronic illness and thus the resulting interactions with their insurer. They will pay slightly less or slightly more for a richer, more transparent and secure package of health coverage.

Will they perceive and value the improved actuarial value of this insurance? Two years ahead of time, it is impossible to answer this basic question.


Posted by on Sat, Feb 25, 2012.