THCB

The Case For the Exchanges


The Federal government will push forward to establish health insurance exchanges regardless of how the Supreme Court rules on the Affordable Care Act in the weeks to come, argues THCB contributor Maggie Mahar.  The only sensible conclusion?  The states should accept Washington’s help and open up the market for insurance online.

The Affordable Care Act (ACA) calls on the states to create health insurance exchanges – marketplaces where individuals and small businesses can shop for and compare health insurance plans. Beginning in 2014, insurers peddling policies on an exchange will have to meet the ACA’s standards by covering “essential benefits,” capping out-of-pocket expenses for individuals, and offering more transparent information about costs and benefits.

Best of all, insurers will not be able to turn down customers suffering from chronic diseases, or charge them higher premiums.

So far so good.

But some states are attempting to derail “Obamacare.” Florida, Louisiana and Alaska have openly declared that they will have nothing to do with setting up exchanges. Last week, Politico.com reported that many others are stalling. The post quoted one consultant predicting that “between five and 10 states” will meet the 2014 deadline. The American Prospect confirmed the news, adding that some states that had begun making plans “have slowed down while awaiting the Supreme Court ruling on the health law.”

Tea Partiers celebrate such reports as a sign that health care reform is toast. Better-informed conservatives understand that even if states don’t create exchanges, the federal government will come in and do it for them. The law is very clear on this point.

This is why John Goodman, editor of the conservative Health Policy Blog, is urging states to move forward to design their own health insurance markets. In principle, there is nothing wrong with a health insurance exchange,” he writes, as long as it is set up right. In order to retain as much control as possible, Goodman advises states to “engage in preemptive reform over the next two years”

The Supreme Court

Some in the chattering classes have suggested that the Supremes may toss out the entire law, including the exchanges, when they strike down the controversial mandate which requires that Americans buy insurance or pay a penalty. The legal question turns on whether mandate can be “severed” from the rest of the legislation, Washington and Lee law professor Timothy Jost explained in a phone conversation last week.

During oral arguments before the Court, two – perhaps three – of the Justices seemed taken with the idea that the mandate is “the heart of the law.” If this metaphor were true, and the mandate were eliminated, the ACA would be a corpse. But on a panel of nine, two who believe in metaphors do not constitute a majority.

As health policy veteran Linda Bergthold indicates in this Health Insurance Resource Center post, it is most likely that the body of the law will remain intact.  The court might overturn the mandate, but she writes “there are a number of ways to get around” that decision and forge ahead with reform.

Reform is a process, not an event

Still, it’s true that many states have been dragging their feet. How will they set up exchanges from scratch by 2014?

They won’t. They will have help.

First, health reform will be a process, not an event. The government made this point in a May 16 “draft blueprint” for the exchanges: “The process of establishing an exchange may extend beyond the first date of operation and may include improvements and enhancements to key functions over a … period of time.” The states will continue to receive grants throughout 2014, and they will have three additional years to spend the money.

During that time, the blueprint explains, the Department of Health and Human Services is willing to partner with them. Most likely, HHS will design enrollment, process applications for subsidies, and staff the call centers that will field the bulk of consumers’ questions.

“There is some efficiency to one entity” setting up Exchange IT, observes the Center on Budget and Policy Priorities’ Judy Solomon. There is no need for each state to reinvent the wheel.

“We have to be realistic;” the process “will be bumpy,” Solomon added in a phone interview last week. But “over the next couple of years … the political situation may change.”

Indeed, a J.D. Power & Associates study released in March reveals that voters already are becoming more aware of the exchanges – and the majority want the opportunities they will offer. Ultimately, Solomon suggests, even the most intransigent politicians will discover that “their residents want the coverage available in neighboring states.”

Maggie Mahar is an author and financial journalist who has written extensively about the American health care system. Her book, Money-Driven Medicine: The Real Reason Health Care Costs So Much, was the inspiration for the documentary, Money Driven Medicine. She is a prolific blogger, writing most recently for TIME’s Moneyland. Previously she wrote and edited the Health Beat blog for the progressive think tank, The Century Foundation. Previous work for the Health Insurance Resource Center includes Health reform: a huge victory for womenShe also provides background on Congressional health care legislation for HealthReformVotes.org, a special project of the Health Insurance Resource Center. This post first appeared at http://www.healthinsurance.org/

Livongo’s Post Ad Banner 728*90

42
Leave a Reply

23 Comment threads
19 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
19 Comment authors
Affordable Health Insurance FLSteveHTiffanybob hertzSS Recent comment authors
newest oldest most voted
Maggie Mahar
Guest

Insurance companies wil be able to cover anyone with a pre-existing condition because a great many more young, healthy people will be joining the pool. Their premiums will help pay for the care that sick people need. Today, the majority of twenty-something and thirty-something who don’t have insurance don’t buy it becuase they cannot afford it. High-income young peope have insurance, middle-income and low-income people don’t. (The notion that young people don’t buy insurance because they think they’re invincible is a myth. Research shows that the cost is the barrier.) Under reform, they wil be eligibe for pretty generous subsidies,… Read more »

Affordable Health Insurance FL
Guest

I don’t understand how health insurance companies can stay in business accepting anyone regardless of pre-existing conditions without raising their premiums. All they will be doing is paying out claim after claim. Also most Americans do not fully understand health insurance, that’s why they turn to licensed agents to help them answer any questions they might have. I can see this being a huge mess.

Bob Hertz
Guest

Maggie, you mentioned that future insurance premiums will depend on what future prices are charged by doctors and hospitals. This may be true but it does not have to be this way. In other nations, and under Medicare and Medicaid, regulators and insurers actually set the prices. If a hospital charges $5,000 a night and the Medicare fee schedule lists the ‘DRG’ at $2,000 a night, the patient is not forced to pay the extra $3,000. Medicare is not forced to pay the additional $3,000. (I am using approximate numbers.) In other words there are limits on balance billing. The… Read more »

Maggie Mahar
Guest

Bob– Yes, I realize that in other countries , the government regulates/negotiates the prices that providers charge. Unfortunately, U.S. doctors and hospitals — and their lobbyists– would never let Congress pass legislation to woudl let government regulate. (They won’t even let Medicare negotiate with drugmakers–though I think eventually that will happen) .Lobbyists and politicians representing doctors and hospitals would tell the American public that if government regulates prices, our heatlhcare would quickly deteriorate. Even Medicare has a very hard time adjusting rates downward on just one service. Though under the ACA the Secretary of HHS will have the ability to… Read more »

Maggie Mahar
Guest

Tiffany– Sorry– meant to reply to you in my last comment. You are right: the entire ACA should be embraced. It is made up of many moving parts, all of which hang together. The net result will be insurance for millions–and better care at a lower cost. Many people don’t realize how the ACA will lower the cost of care, while lifting quality. Like God iIt’s all in the details, and most people don’t have the time to read pages of deatils. Unfrotunately, the media hasn’t done a very good job of laying out the details one by one, in… Read more »

Maggie Mahar
Guest

Bot Hartz & Tiffany Bob — I think you and I would agree that heatlh insuarnce and life insurance are two very different animals. Health insurance is a necessity. Without it, people don’t have access to heatlh care. And we all need heath care; at some point in our lives, most of us will need quite a bit of heatlh care. . Life insurance is good protection if a working motther or father dies unexpectedly, and the family was depending on their income to help pay the mortgage, for college, etc. But in most cases, the parent doesn’t die early,,… Read more »

John R. Graham
Guest

“Without health insurance people don’t have access to health care.” That obviously incorrect statement may be the root cause of this country’s health crisis. It’s as absurd as saying that without car insurance people don’t have access to a car. On May 27, the Los Angeles Times reported on hospitals giving significant discounts to cash-paying patients, debunking the notion that insurers somehow add value by negotiating network discounts. The fact is, if the government freed us to spend our own money on our own health care, prices would drop, and most of us would go nine years out of ten… Read more »

SteveH
Guest
SteveH

“The fact is, if the government freed us to spend our own money on our own health care, prices would drop…”

What’s stopping you from spending your own money? Drop your insurance, if you have any, and go ahead and negotiate on your own.

John R. Graham
Guest

Because the government introduces a huge tax bias to having employer based health “benefits” in lieu of money wages. If I went to my employer and asked for a raise to compensate for dropping health benefits it would not happen.

I have heard anecdotes that many self-identified “uninsured” cash-paying patients are actually insured. However, for medical care below the deductible they do not want to waste time and energy dealing with managing a claim and just present themselves as uninsured, with cash in hand.

Maggie Mahar
Guest

Hynotherapy & SS

Hypnotherapy — Thank you!

SS: The good news is that, under reform, you will have to pay nothing out of pocket for preventive care– which includes most of the care that healthy people use.

Maggie Mahar
Guest

Peter I– On why prices will be different for different policies, see my reply to Dr. Mike. Let me add that some insurers will be able to offer lower premiums because they will be better at keeping a large population heatlhy., For instance, today, Kaiser has greatly reduced mortalities among patients suffering from heart disease, and has done a good job of using prevenentive medicine to keep its patients healthier. This reduces Kaiser’s costs. But today, Kaiser’s premiums are not noticeably lower than competing insueres’ pollicies (though the coverage is often better, accoding to customers’ ratings ) because iKaiser is… Read more »

Maggie Mahar
Guest

DR. MIke, everyone–

Please ignore the last three lines in my last post. Somehow, my reply closed and printed before I had a chance to delete them.

Maggie Mahar
Guest

Jonathan H., Dr. Mike, Jonathan:: According to the dictionary “peddling” just means moving from place to place to sell something. (The term goes back to pushcart peddlers. ) The dictionary notes that in recent years, “peddling” has become associated wtih “peddling drugs” (a 3rd defintition, but I understand why you felt a negative connoatition.. I used the term mainly because I wasa trained as a financial journalist, and learend to find synonymns for words like “buy” “sell” and “pay.” Otherwise, our stories wouldl use those words in every other sentence. So, financial jouranlists often use slangy terms like “lay out”… Read more »

Tiffany
Guest
Tiffany

Health care exchanges, if embraced by the states, would allow people to navigate health care more easily. But the entire ACA should be embraced, as it would help millions of Americans who were previously uninsured and would keep insured Americans from having to pay for emergency center visits (Sam Ennis speaks eloquently to this here: http://www.constructionlitmag.com/additions/appeal-of-the-affordable-care-act).

bob hertz
Guest

I have sold and administered life insurance for many years, and what we find is that guaranteed-issue life policies cost two or three times what an underwritten policy costs.

Not saying that this will hold for health insurance, I don’t know. But if it does, that will mean a need for more costly subsidies. And that too is all right, but the group that is to receive subsidies is not a solid voting bloc — and so there will be a temptation to chip away the subsidies for other budget causes.

SS
Guest
SS

I think these exchanges are a good thing, and I don’t understand why states are fighting it. They can’t possibly want the federal government to step in. They should look at Vermont, they are taking a pro acitive role in creating their exchange. The exchanges are going to benefit everyone and lower our premiums because as individuals we will have more options and insurance companies are going to have to treat us better if they want our buisness. I have been in the work force for over 10 years now and have been paying premiums. I hardly ever have to… Read more »

Hypnotherapy brisbane
Guest

Yes! i am very much agree about this post, basically all the points are described very well. please post some more new article for us.

thanks

Dr. Mike
Guest
Dr. Mike

I’m sorry, but I don’t get it – can someone explain it to me? If all the plans on the exchange have to meet the same basic coverage requirements, and if those requirements are in fact fairly comprehensive, won’t those polices be fairly expensive? And if they are fairly expensive, will there really be any policies available that exceed the “basic” coverage? Would anyone buy them? So…Won’t all the policies on the exchange essentially be the same with little to distinguish one from another? If so, why is the exchange necessary again? Why not just pick an insurer, call them… Read more »

SteveH
Guest
SteveH

Dr. Mike, all the plans won’t be exactly the same. Kaiser has a good information sheet called “What the Actuarial Values in the Affordable Care Act Mean” you can see at http://www.kff.org/healthreform/upload/8177.pdf From that pub: “The ACA identifies a range of services that must be included in the benefits package that all individual and small business plans must use – and requires preventive services to be covered with no patient cost-sharing… HHS). These requirements apply to all tiers of health insurance coverage, meaning that differences in the levels of coverage will reflect variation in cost-sharing, not differences in the underlying… Read more »

Dr. Mike
Guest
Dr. Mike

Thanks, I didn’t know about the 4 levels. I actually like the idea of the exchanges, I am just disappointed that there is not more understanding of how people at different income levels actually need (or at least would benefit from) insurance products that simply do not exist today, and that will not exist due to the required “range of services.” If you are not going to get a subsidy, why would you, if you had a choice (which you don’t), pay premiums to the insurer so that they could pay your doctor visits? What a stupid idea we have… Read more »

Peter1
Guest
Peter1

I don’t understand how supporters of these insurance exchanges expect the premiums to be very far apart. After all they’re measuring risk and the risk is the same if they have to offer the same policy to the same people and the insurers are saying their profit margins are small. “Best of all, insurers will not be able to turn down customers suffering from chronic diseases, or charge them higher premiums.” No, but they will price the policy higher for everyone unless the government subsidizes the risk. I can’t wait though for the supreme court to strike down the mandate.… Read more »

John R. Graham
Guest

Whenever an advocate of individual choice in health care advocates state exchanges as a way to pre-empt or limit the harm inflicted by Obamacare, supporters of government-controlled health care immediately applaud. This should make the dwindling number of free-market exchange advocates should realize that they are kicking the ball towards their own net.