The state budget gets most of the public attention, but the Malloy administration has another major project to tackle this year: creating a health insurance marketplace known as the exchange.
“The exchange is a cornerstone of health reform,” said Jeannette DeJesús, the governor’s special advisor on health care reform. “The exchange is a very significant piece of work that has to be developed, with many opportunities to make it weak and get it wrong. Working quickly but working carefully has really been the challenge.”
The exchange must be in place by 2014 and financially self-sustaining by 2015. It will have a wide range of functions, including offering a website for individuals and small businesses to compare insurance plans and certifying that the plans meet certain standards. Think of the travel site Orbitz, if its administrators were also responsible for ensuring that the flights it offered met certain conditions, rating airlines and figuring out which passengers qualified for subsidized fares.
DeJesús said the administration hopes to have a board of directors for the exchange in place by July 1 so they can hire an executive director and move on to the next stage of planning.
Before any of that can happen, the legislature must pass a bill to establish the exchange. But the debate might not be quick or easy. The administration has proposed one bill, but there’s a competing proposal with some key differences, including in the makeup of the exchange’s board. Some advocates want the bills to go further and include specific policy decisions, including establishing a state-run plan for low-income adults who don’t qualify for Medicaid.
Senate President Pro Tempore Donald E. Williams, D-Brooklyn, who introduced a third bill that he said was intended to “accommodate whatever breaking news we get” about the exchanges, said people are trying to learn what other states are doing and what would best fit with the federal law.
“I wouldn’t say that at this point folks are down in the trenches negotiating the fine print,” he said. “That’s yet to come.”
DeJesús said she’s not concerned about getting a bill passed before other states.
“We did not see any advantage in being first or second,” she said. “It’s good for us to learn about what other states have done and what they would do differently … It’s very important that we get this right.”
U.S. Rep. Joe Courtney, D-2nd District, said implementing health reform–and the exchange in particular-will be one of Malloy’s biggest challenges.
“I think the implementation of the state exchange health exchange and health care plan is going to be the dominant fiscal challenge after getting this budget done for the rest of his administration,” Courtney said. “If you look at 2014, the date when this thing really goes into operation, that’s going to take a pretty big piece of his term in office.”
In addition to serving as a platform for individuals and small businesses to buy insurance, the exchange will be responsible for making sure the health plans meet certain requirements, including providing a set of “essential health benefits.” It will be responsible for keeping track of which employers do not offer insurance to their workers, rating health plan quality and coordinating eligibility for public programs like Medicaid.
For consumers, the most visible part will be the website that provides comparisons of health plan options.
Massachusetts already has a version of the exchange, known as the Health Connector, which was created before the federal reform law. People can enter information about their age, family size and location to view health plans available to them. They can choose between gold, silver and bronze plans; bronze plans have lower premiums but higher cost-sharing, while gold plans cost more each month but carry lower copayments and deductibles.
Utah also has an exchange up and running, and California has passed legislation to create its exchange. But Kathleen Nolan, the top health care advisor at the National Governors’ Association, said she doesn’t know of any other states that have already passed legislation.
“A number of states have legislative bills right now and a number of states have decided to delay legislation until next year,” she said. “If they don’t know enough about what the exchange is supposed to do and be, then maybe moving forward with a legislation package doesn’t make a lot of sense right now.”
Nolan said states are “all over the place” in terms of how they’re structuring the exchanges.
“That is very widely variable. And it’s as much based on the culture of the state and their thinking about how the exchange will operate as it is on anything else,” she said.
State officials have different ideas about who will run the exchange, how it should be run, and how it will be structured. “All of those vary quite dramatically, from very in-house types of situations to public-private or private-sector type structures,” Nolan said.
States are also looking very differently at how free the marketplace will be.
“Some states may put a lot of requirements and really want to see a very controlled marketplace, while others might want to see any willing plan who can meet the basic qualifications, [so it] is wide open,” Nolan said.
So far, only Alaska has declined the planning money for the exchange. And no state has said definitely that they’ll let the federal government run the exchange, an option under the health reform law, instead of having a state-run one.
In Connecticut, the two fleshed-out legislative proposals for creating the exchange have many details in common. Both would make the exchange a quasi-public agency and establish a board of directors. But there are some key differences in the bills.
One, the administration’s bill, is based on model legislation developed by the National Association of Insurance Commissioners.
The other bill, which started in the House, would amend state insurance statutes to comply with the federal health reform law and includes provisions for establishing the exchange.
One of the major differences in the bills is who would run the exchange. The administration’s bill specifies board members should represent specific groups, including large and small employers, labor, health care providers, consumers, actuaries, the health insurance industry, and a health care economist. It would permit board members to have financial interests in firms or corporations affected by the exchange as long as they do not take part in deliberations or votes affecting them.
The House bill, meanwhile, would not allow anyone to serve on the board who works or consults for an insurer, health care provider, health care facility or insurance producer or broker. The bill does not specify what groups must be represented on the board, but requires that each member have expertise in at least two of the following areas: individual coverage, small employee coverage, health plan administration, health care finance, health care delivery system administration and health plan purchasing.
It would also establish a consumer advisory committee that would advise the board on consumer matters.
Both bills call for the exchange to provide grants for “navigators” that will help people enroll in the plans, market the exchange and give out fair and impartial information about the plans and the availability of tax credits for some people who buy coverage. The House bill specifies that the grants can’t be awarded to an insurer or anyone receiving consideration from an insurer for getting a person to enroll in a particular plan. The other bill does not.
Both bills cleared the Insurance and Real Estate Committee Thursday, although some Republican lawmakers raised concerns that the House bill included too many policymaking functions for the exchange. The bills, which will now go to the Government Administration and Elections Committee, are considered works in progress and subject to change before being finalized.
Many people who submitted testimony on the proposals cited the House bill as having stronger conflict-of-interest provisions. Some groups asked for representation on the exchange’s board.
And several advocates want the exchange bill to go further and require the state to create a health plan for adults whose income is slightly too high to qualify for Medicaid. The health reform law gives states the option of providing a “basic health plan” for adults earning between 133 percent and 200 percent of the poverty level, and the state could receive federal funds to do it. Otherwise, those adults would receive federal subsidies to buy coverage through the exchange.
Ron Pollack, executive director of the consumer health care advocacy group Families USA, said the model legislation the administration’s bill is based on is a “good starting point” for legislatures to work from.
“From our perspective it’s very important that these exchanges work to really ensure the protections that were intended by the Affordable Care Act,” he said. “But there’s quite a range in terms of how deeply the states will regulate, what kinds of plans can sell their product in the exchange, what are the minimal requirements.”
‘From a consumer point of view,” he added, “we’re going to want to see a somewhat more active role for the states than some might want to play.”
DeJesús said the administration’s bill purposely does not make policy decisions, which she said would be premature. Her office is getting ready to hire a market analysis firm to reach out to businesses and communities around the state. The goal, she said, is to find out how different sectors think the insurance exchanges will affect them and use that information to shape their decisions.
“We’ll need to get that data quickly to apply for an implementation grant, to give us the money we need to do the next phase of developing the exchange,” she said.
DeJesús said the House bill is more specific, with “lots of policy decisions” included.
State Healthcare Advocate Victoria Veltri said the composition of the board will be critical to the way the exchange functions. She said she expects the administration and proponents of the House bill to reach a compromise on the board composition.
“We have this chance to get it right so we want to get it right the first time,” she said. “The good news is there’s discussion happening and that’s what it takes to come up with a good bill.”