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HIE plans draw bipartisan support
According to the Affordable Care Act, Americans with incomes at or above 134 percent of the federal poverty limit who do not have employer-based health plans-as well as small businesses-will be able to use state health insurance exchanges (HIEs) to select and purchase health insurance coverage. The HIEs, together with the expansion of Medicaid to those with incomes at or below 133 percent of the federal poverty limit, are key components in the effort to extend health insurance benefits to nearly all Americans under the ACA.
According to Joel Ario, director of the Office of Insurance Exchanges in the Department of Health and Human Services, HIEs became a centerpiece of the ACA legislation because, unlike so many other elements in the Act, HIEs enjoy wide bipartisan support. Why? Because their concept and structure so easily accommodates the vision of partisans on both sides of the debate.
One vision sees HIEs as critical to opening up markets and competition in health care, while the other sees the HIEs as a means of encouraging a seamless system in which the public sector (Medicaid) and private sector (commercial health insurers) offer similar basic benefits, based on the yet-to-be-announced “essential benefits” package called for in the ACA.
Vision one: “A purchasing pool” for health insurance
Ario credits the origin of HIEs to a fellow insurance commissioner, Larry Morell. Around 2000, Morrell responded to concerns about commercial health plans by suggesting there ought to be a purchasing pool or exchange mechanism to make a broader range competitive health insurance options available.
“The feeling was, ‘why can't we create an exchange for those who don't have the advantage of getting their coverage through employment with larger companies?’” says Ario. Soon, the idea took off, encouraged by many who preferred the HIE concept to the Clinton-era concept of a single-payer system.
As governor of Massachusetts, Mitt Romney in 2006 signed Massachusetts' first-of-its-kind health reforms into law and led Republicans in “marrying the exchange concept with a personal responsibility requirement, a sense that everyone ought to participate in the system.” Implicit to this approach was the idea that a larger market and more insurer competition, based on universal participation and a defined package of minimum benefits, would deliver broad price, service, and public health benefits. “The big focus here was on inclusion, with less focus on regulation,” says Ario.
Vision two: Integrate public, private health plans
On the other side of the spectrum, the insurance exchange concept fit neatly with another group seeking an all-inclusive solution, but one that clearly integrated with Medicaid. These “integration” proponents recognized that there had to be a mechanism for insuring the 30-plus percent of Americans not covered by employer-provided health insurance, those whose incomes fell below threshold levels, or those excluded due to pre-existing conditions.
The idea here, says Ario, “was the exchange would be a way of getting the market open to everybody from zero to 400 percent of the federal poverty limit. The thought was that if you get insurance coverage open to the zero to 400 group, those making over 400 percent of poverty probably have employer-based coverage or can afford to buy it themselves.”
Proponents of this vision envision a seamless integration of employer-sponsored insurance, exchange-based insurance, and Medicaid in which “there's no wrong door” for the consumer. By establishing a single limit for Medicaid eligibility-income of zero to 133 percent of the federal poverty level, the Affordable Care Act clarifies insurance eligibility for individuals whom Ario says might “otherwise go off the cliff” by losing coverage amid the varied qualification and income requirements of state Medicaid systems. Of course, those between 134 and 400 percent of poverty who purchase their own insurance through the exchanges become eligible for a federal tax credit, which is intended to subsidize their coverage, just as an employer-based plan would.
Because the ACA is clear on the eligibility limits, Ario says it makes the insurance qualification process relatively easy. “By definition, when you have a process to establish Medicaid eligibility, you can also establish exchange eligibility, as well as eligibility for the tax credit. It's seamless.” To support the “no wrong door” approach to qualification and coverage, many are now pressuring states to move their Medicaid administration systems to newer platforms that “synch up” with the exchanges and simplify the process of getting people qualified and signed up for coverage.
Are there any wrenches in the works?
Even as the reality of near-universal insurance coverage takes shape, there are a number of factors that could complicate implementation of the Affordable Care Act. While Ario says that these won't have a direct impact on the development of health insurance exchanges, they are nonetheless cause for concern:
Major state budget problems have prompted many state governors to ask Congress for repeal of the “maintenance of effort” requirement, which states had to accept to qualify for enhanced FMAP funding under the American Reinvestment and Recovery Act of 2009. MOE requires states to maintain 2010 Medicaid eligibility levels until 2014 (when the new ACA eligibility thresholds go into effect) or lose their federal Medicaid funding match.
According to The National Council, a House bill to repeal the MOE provision is now under consideration, as is a House budget resolution that would place a ten-year ceiling on federal healthcare spending. Passage of the former would allow cash-strapped states to roll back Medicaid eligibility, while passage of the latter would effectively force major cuts in the level of federal matching funds available to state Medicaid programs. Both would threaten the fiscal assumptions that underlie the Medicaid/HIE insurance expansion scheduled for 2014 under the Affordable Care Act.
While states are being asked to “synch up” their Medicaid administration systems with the evolving HIEs, Ario points out that they have little or no money to do so. The only significant new funding available to states under the ACA is the 90/10 federal/state Medicaid match promised to finance the Medicaid expansion from 2014-18. But these funds cannot be tapped for capital or systems improvements-they're strictly for covering additional beneficiaries. States' inability to finance new, more integrated systems could disrupt the “no wrong door” approach and make qualifying for coverage more difficult.
Experts are seeking ways to address the likely problem of “eligibility churn” between Medicaid and the HIEs. Such churn would affect adults whose family incomes bounce above or below the 133 percent of poverty eligibility threshold for Medicaid or exchange-based insurance (which includes an income-based tax credit).
One study estimates that within 12 months, 50 percent of all adults with family incomes below 200 percent of the federal poverty limit, some 28 million, will experience this kind of eligibility change, which could compromise the quality and continuity of care. Possible solutions include minimum eligibility periods, continuous Medicaid enrollment, and “dual certified” plans to serve both Medicaid and exchange enrollees.1
Reference
1. Sommers, B. and Rosenbaum, S. Issues in Health Reform: How Changes in Eligibility May Move Millions Back And Forth Between Medicaid and Insurance Exchanges. Health Affairs Feb 2011 30:2228-236.
Similar coverage = seamless care
There's another integration effort afoot as well, this one to explore avenues for creating a common platform of benefits between Medicare insurance plans and basic commercial health insurance plans. Proponents say that these would be based on agreed-upon “essential benefits” defined at the federal or state level. The goal of such thinking is that if individuals or families lose employer-sponsored or exchange coverage and qualify for Medicaid coverage instead (or vice-versa) a continuity of benefits and care could continue.
“If those are two different worlds of coverage, that's not going to be good for the consumer. While it's better than going off the cliff and having no benefits, it's not great.” For this reason, Ario says that “what's started to happen is that Medicaid MCOs in every state are looking at doing what some have already done-get licensed to sell in the commercial world so that they can serve people on both sides of the [133 percent of poverty] line. For people with that kind of plan, if you move above the line, you can keep the same carrier and same plan, just change how it is financed.”
“On the commercial side, the same thing applies,” he says. “There's a lot of buzz in the commercial world about the opportunities to serve Medicaid, enough that some in the Medicaid world are getting a little nervous, given some of the past practices of the commercial insurers. But remember,” he reassures, “we're changing the insurance system's DNA now. Going forward, insurance is going to be about price and quality, not about risk selection and cherry picking.” He believes that over time, insurance markets will begin to “bleed together.”
HIE development proceeding nationwide
To date, 49 states (as well as the District of Columbia) have applied for and received HIE planning grants. Left out up to this point is Alaska, which is still struggling with problems of scale, given its vast geography and small population, explains Ario. A number of states, including Utah and Massachusetts, have functioning exchanges that he says are “very different, yet based on the same model.”
All states with approved plans become eligible for implementation monies, which will fund each exchange through its first year of operation. After that, it must self-fund. Many states are now on what he calls the “pace car” track-on schedule to be operating by 2014. States that fail to develop a functioning exchange by 2014, in the judgment of the HHS secretary, likely will be required to adopt a yet-to-be developed “fallback” exchange model from the federal government.
Insurers who participate in the exchanges are expected to offer a basic benefit plan, built around a nationwide “essential benefits” package that is expected to become available from the Institute of Medicine in fall 2011.
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