Health Care Reform Implementation: Difficult Issues for States to Resolve

From AAPD (4.7.11):

Health Care Reform Implementation: Difficult Issues for States to Resolve

By David Heymsfeld, AAPD Policy Volunteer

On April 4, AAPD attended a forum sponsored by AARP on” Launching Insurance Exchanges: What are the States Doing?”  The panelists included Joel Ario, Director of the Office of Health Insurance Exchanges, at the U.S. Department of Health and Human Services, John Rother, AARP Executive Vice President for Policy, Strategy and International Affairs, and high ranking State health care officials from Maryland, Utah, Virginia and Colorado. AAPD expects that many people with disabilities may be able to receive their health insurance via these state level insurance exchanges, once implemented.

Background: Under the recently passed Patient Protection and Affordable Care Act (generally known as the health care reform bill), states are required to establish Health Care Insurance Exchanges by January 2014.  These exchanges will offer health insurance policies (generally sold by private insurance companies) to individuals who are not eligible for Medicaid but do not have insurance under group or individual policies. The exchanges will also offer insurance to small employers (less than 100 employees), and to persons eligible for subsidies under the reform act (including persons not qualifying for Medicaid with incomes of up to 400% of the Federal Poverty Level).

Benefits: Forum presentations described the benefits expected from these exchanges:

• making insurance available on reasonable terms to the large group of individuals who aren’t eligible for Medicaid, and aren’t covered by group or individual policies, and to small businesses who are obligated to provide insurance under the reform act;
• helping consumers by providing, in a user friendly format, information on the costs and benefits of the plans offered through the exchange;
• helping consumers navigate the entire health care system, by offering a single point of contact at which a consumer can obtain a determination of whether he/she  is eligible for Medicaid or for subsidies under the new law, or for state sponsored plans sold through the exchange.

The panelists emphasized that the new law says states will design their own exchange to reflect local needs, the existing private insurance marketplace and any state programs providing insurance. The federal government will not mandate a uniform “one size fits all” exchange.

Outlook and Challenges: Panelists said that states are at different stages of setting up their exchanges. They must first pass legislation to establish the exchange as either a regular state agency, an independent agency, or a non-profit. They noted that whether a state has been able to pass the necessary legislation is somewhat dependent on the attitude of elected officials to the Act.  For example, Virginia, which is challenging the constitutionality of the health reform Act, has not been able to pass legislation to establish a health information exchange.

Panelists also made it clear that for the exchanges to succeed a number of difficult policy issues will have to be resolved including some needing federal guidance to the states. These difficult issues include:

• Equalizing insurance products available within and outside of the exchange.  Under the law individuals may choose to buy insurance outside of the exchange. If products sold outside the exchange provide less coverage and lower rates, young healthy consumers will buy these products. The exchange policies will then get a disproportionate number of consumers with health problems who will be expensive to insure, raising the rates for exchange policies. This is referred to as “adverse selection”;
• Providing some stability for consumers on the type of benefit they will receive. If a consumer is on the borderline of Medicaid eligibility, he/she shouldn’t be subject to frequent shifts between Medicaid and private policies as his/her income increases or decreases. A shift into or out of Medicaid might force a consumer with extensive medical problems to find a new team of health care providers. One concept is to allow consumers with insurance policies to keep these policies if their income drops and they become eligible for Medicaid;
• Ensuring that the governance of the exchange provides opportunities for input from consumers, and from insurance experts;
• Developing user friendly software to give consumers the ability to determine which of the many policies sold on an exchange will best meet their needs. A key component of any health information exchange will be a state website with available information such as who the providers are, what are the premium rates and eligibility factors. AAPD has commented into HHS rulemakings asking for these websites to be technologically accessible and usable to the widest number of users.
• Encouraging younger consumers to buy policies, rather than exercise their option under the law to pay penalties for not buying insurance. That is, apparently some younger consumers are comfortable not having health insurance because they do not expect to become ill, and because they know that if they do become ill, emergency rooms are legally required to treat them, regardless of their financial condition and whether or not they have insurance.
• Determining what basic benefits insurance sold on the exchange must offer.
• Ensuring that the exchange offers a variety of products to meet different consumer needs.

AAPD will continue to monitor the issues as states begin their implementation of these health information exchanges.

Action Steps:

1. Found out if your state has begun or already established a Health Information Exchange (HIE) by contacting the state Medicaid office.
2. If necessary, work with the state to ensure the website for any HIE is accessible and usable for people with disabilities.
3. Find out what steps your state Medicaid program is taking to ensure involvement of consumers with disabilities in the new health care reform insurance programs.

For more information on how Medicaid operates, please visit the government website at http://www.cms.gov/home/medicaid.asp

For a list of state Medicaid programs & contact information visit, http://www.fastemc.com/femcjom/find-your-states-medicaid-office.html