States Prepare for Health Insurance Exchanges

During December, Kevin Counihan visited 7 cities in Connecticut, hosting sessions open to the public focused on explaining the state’s upcoming health insurance exchange. He delivered a speech and fielded questions in towns that have a large number of uninsured people, a group that Mr. Counihan expects will benefit from the new marketplace.

As chief executive officer of Connecticut’s exchange, Mr. Counihan anticipates a busy year filled with even more inquiries from consumers and the healthcare industry, as do his colleagues from other states that need to have the exchanges ready for people to enroll in October. Coverage will begin in January 2014.

The concept has not been universally embraced. Only 18 states and the District of Columbia submitted applications by the December 14 deadline to run their own exchanges. As of early January, the US Department of Health and Human Services had granted conditional approval to each of those states with the exception of Mississippi. The remaining 32 states have until February 15 to decide whether to partner with the federal government to manage their exchanges. Many of these states are expected to pass and allow the federal government to create and run the exchanges.

Created as part of the Patient Protection and Affordable Care Act (ACA), exchanges are places where individuals and small businesses (up to 100 employees) can shop for health insurance. The Congressional Budget Office estimates approximately 9 million people will be part of the insurance exchanges next year, and the number will increase to 25 million by 2017.

People will be able to apply online, in person, through the mail, or over the telephone and compare the options of several carriers. If they have questions about coverage and/or eligibility, they can speak with a call center representative or go online.

To encourage participation and help defray costs, the federal government has provided grants to states and subsidies to people who would otherwise have trouble affording the insurance. However, states choosing to run their own exchanges in 2014 must ensure the exchanges are financially self-sustaining by January 1, 2015.

The next few months are going to be hectic, according to Mr. Counihan, who said the process necessary to meet the October deadline is akin to implementing a system in 10 months that would normally take 3 years. The major issues include deciding what plans will be eligible to be sold on the exchanges and partnering with information technology vendors to make sure people are able to enroll without encountering any problems.

In Connecticut, there are 19 full-time staff members working on the exchange as well as a 14-member board of directors overseeing the exchange. Also, there are 8 employees from KPMG in charge of project management and 40 employees from Deloitte handling system implementation and design. Mr. Counihan and others are in touch with brokers that will sell the plans and insurers that have submitted applications to offer plans on the exchange; decisions about which insurers will be part of the exchange are expected in the next few months.

The exchange will evolve over time, as the state continues to seek input about what is working and what is not.

“Our view is that we are all in this together and this is not a confrontational or adversarial relationship,” Mr. Counihan said in an interview with First Report Managed Care. “This is all about shared responsibility. The best way to achieve this is to be collaborative. We made it very clear to the plans that we are going to take their issues, whether they be policy-based, administrative, marketing, IT, and work through them together.”

“We may not always agree on every issue, but we are always going to talk, we are always going to keep their issues top of mind and try to accommodate them as much as possible. And that is true of all of our key stakeholders. It is true of the advocacy community, the brokerage community, and all of the people involved.”

When President Barack Obama signed the ACA into law in March 2010, exchanges were among the major pieces of legislation that he touted to help expand insurance coverage. Still, they were not popular for everyone, especially Republicans who complained about government interference in the insurance industry and the possibility of higher costs to taxpayers who must help pay for the subsidies.

On the same day the ACA passed, 26 states sued to have it ruled unconstitutional. The court battles continued for more than 2 years until the Supreme Court upheld the healthcare reform law in late June 2012. At that time, though, Republican presidential hopeful Mitt Romney vowed to overturn the ACA.

With President Obama re-elected in November, there was no more uncertainty surrounding exchanges, although challenges remained. Insurers are required to meet certain standards and meet qualifications before being approved to participate in the exchanges. Most major plans intend to offer options. For example, 10 insurers in Maryland have expressed interest. The state’s decision is expected by July.

“All we are doing is building the store,” Rebecca Pearce, executive director of Maryland’s exchange, said in an interview with First Report Managed Care. “We need [insurers] to put their products in it. We very much rely on them.”

Of the 730,000 uninsured people in Maryland, Ms. Pearce anticipates 180,000 will participate in the exchange next year. Open enrollment begins on October 1 and continues for 180 days. Coverage begins on January 1, 2014.

Ms. Pearce said the exchange will also help employment in the state. The Hilltop Institute, a nonpartisan health research organization based at the University of Maryland, Baltimore County, conducted a study that estimated the ACA will bring in $600 million in federal funding to Maryland and create 9000 jobs by next year and 26,000 jobs by 2020.

“Our short-term vision is to get as many people insured as possible, to make sure we are addressing the uninsured population, and to start driving down costs to uncompensated care by lowering uncompensated care,” said Ms. Pearce, who was hired in September 2011 after working as director of benefits administration at Kaiser Permanente. “But I think the long-term goal is different. We want to be able to bend the cost curve in the state of Maryland. We want to be able to change the way that healthcare is delivered.”

In Connecticut, Mr. Counihan has similar aspirations. The exchanges are a step in the right direction at making coverage more readily available, according to Mr. Counihan, who said he believes healthcare access should be “a right of citizenship and not a privilege of employment.”

However, during his trips throughout Connecticut and in previous jobs working as head of a private health exchange for larger health insurers and with the state of Massachusetts, he has heard consistent complaints from employers and individuals about the rising costs.

“We have heard a lot about affordability problems, including issues around costs of coverage and how many people have to cobble together part-time jobs in order to pay premiums and make a living,” Mr. Counihan said. “That was rather heartbreaking to hear, however, it was not surprising. This is the reality of things. But it does underscore the fact that we continue to have a huge affordability issue in the country and certainly in our state.”