The Senate on Tuesday passed legislation to create a health insurance exchange, laying the groundwork for a new insurance market that will play a key role in expanding coverage under the federal health reform law.

The bill, which passed the Senate 23 to 13 and will now go to the House, establishes a quasi-public agency that would be charged with developing and running the exchange, a marketplace for individuals and small businesses to buy health insurance.

The exchange does not have to be up and running until 2014, and some Republican lawmakers questioned why the state should move forward now, while other states are challenging the constitutionality of the health reform law and many key details must still be provided by the federal government. Advocates of the bill have said there is too much work to be done to wait until next year. Several other states are also moving forward with exchange legislation.

“I think it’s very important that as we look at the exchange, we understand that what we’re really talking about is a process that makes getting health care easier for folks,” Senate President Pro Tempore Donald E. Williams Jr., D-Brooklyn, said at the end of a 2 1/2 hour debate.

The exchange will have a wide range of responsibilities. It will offer a choice of health plans–all or most are expected to be from private insurance carriers–to individuals and small businesses, including those who qualify for federal subsidies to buy coverage. It will give consumers a way to comparison shop for plans, operating a website that some have compared to travel websites like Orbitz.

As part of the federal reform law, insurance plans sold on the exchange will be subject to more rules than the existing market requires. Exchange plans must be offered with at least three benefit levels–gold, silver and bronze–with varying levels of premiums and cost-sharing. Each plan sold on the exchange must also cover certain “essential health benefits” that will be defined by the federal government. The exchange will be responsible for certifying that plans meet the requirements, rating the plans, and coordinating enrollment in public programs like Medicaid for applicants who qualify.

The exchange will also have reporting and administrative responsibilities, including granting exemptions from the federal law’s individual mandate to people who qualify.

The bill that passed the Senate Tuesday creates an 11-member exchange board and sets rules and responsibilities for the exchange, but leaves many policy decisions to be made later. The exchange must be financially self-supporting by 2015, and the bill allows the exchange to charge assessments or user fees to health insurance carriers to fund its operations.

Sen. Joseph J. Crisco Jr., D-Woodbridge, and Sen. Terry Gerratana, D-New Britain, described the exchange as a way to cover more people and give them more information about their health insurance choices.

“It is an extremely important bill that the state has to adopt,” said Crisco, the co-chairman of the Insurance and Real Estate Committee.

Several Republican senators questioned why the state does not wait to move forward. If a state does not create its own exchange, the federal government will do it. Gov. Dannel P. Malloy has said Connecticut will develop its own, but some legislators suggested waiting until more information is available on what a federally run exchange would look like.

“What’s the hurry?” Sen. Robert J. Kane, R-Watertown, asked.

Crisco said the state could do a better job designing its own exchange rather than relying on a federal plan.

“We are the number one insurance state in the country, and we’re trying to stay that way, and I believe we have the expertise and the knowledge that perhaps many other states do not have,” he said. “Hopefully other states can follow what we accomplish in this legislation.”

Sen. Michael A. McLachlan, R-Danbury, said action now is premature.

“More than half of the states in the United States are in fact going the opposite direction that Connecticut’s proposing to do,” McLachlan said. “They’re in court suing the federal government.”

“I believe that the state of Connecticut probably ought to sit back and wait a little bit longer to see what is the appropriate next step to take, especially given the fact that so many points of this new exchange haven’t gelled yet,” he added.

Three exchange bills passed out of legislative committees this session, and the bill the Senate passed, an amended version of a bill proposed by the Malloy administration, reflected a combination of them.

Some of the key differences between the bills had to do with the composition of the exchange board and conflict-of-interest provisions. The Connecticut Hospital Association and the Connecticut State Medical Society submitted testimony earlier this year asking that the groups they represent be included on the exchange board or in the planning process, while consumer advocates favored conflict-of-interest provisions that excluded people working for health insurers or health care providers from the board.

The bill the Senate passed would prohibit anyone on the board from being employed by or otherwise affiliated with insurers, insurance producers or brokers, health care providers or health care facilities, or their trade groups.

That provision drew skepticism from Sen. Jason Welch, R-Bristol.

“It seems that we are excluding from the board some very knowledgeable people within the industries we’re seeking to impact here,” Welch said.

Crisco said the exchange board and staff would have people with expertise in a range of fields. “I believe that there’s ample provisions to make sure we draw the resources” that are necessary,” he said.

The bill calls for the exchange board members to have expertise in specific subjects, including small employer health insurance coverage, health care delivery systems, access issues that self-employed people face, barriers to individual health care coverage, health care finance and benefits plan administration. The board would nominate three candidates to serve as a CEO for the exchange, and the governor would select one.

Some lawmakers questioned the cost of the exchange.

A similar entity in Massachusetts cost $19.5 million in its first year and $29.9 million in the second, although it has more responsibilities than the Connecticut exchange would and covers a state with roughly twice the population, according to the legislature’s nonpartisan Office of Fiscal Analysis. The federal government has provided grants to plan the exchanges, and the planning process is not expected to require additional state money, according to OFA.

Arielle Levin Becker covered health care for The Connecticut Mirror. She previously worked for The Hartford Courant, most recently as its health reporter, and has also covered small towns, courts and education in Connecticut and New Jersey. She was a finalist in 2009 for the prestigious Livingston Award for Young Journalists, a recipient of a Knight Science Journalism Fellowship and the third-place winner in 2013 for an in-depth piece on caregivers from the National Association of Health Journalists. She is a 2004 graduate of Yale University.

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