Health insurance exchange draws praise, ridicule
They did it by creating what’s called a health insurance exchange, a device that every state is compelled to use to comply with federal health reform.
As with many things linked to the Affordable Care Act, the exchange is controversial, untested, and the financial risks unknown, acknowledge supporters and detractors alike. Some business groups worry the newly created exchange will be overly rigid and expensive.
It must be operational by 2014, the deadline for implementation which has fallen to state employees within the Washington State Health Care Authority.
Molly Voris, exchange project manager for the HCA, said it will be an information clearinghouse that will allow businesses to enter their financial and employee data and then receive a list of standardized plans and costs from a broad spectrum of insurers, along with a description of reform requirements and possible subsidy offerings to lessen premium expenses.
“I think this opens up a new opportunity for small business to really offer that insurance benefit to employees,” she said. “We know it’s been a struggle.”
She said the exchange will function as a sort of one-stop shop for small businesses, a way to lessen the administrative nightmare of trying to find and vet appropriate coverage plans for their employees.
At a basic level, the exchange is expected to offer four tiers of coverage plans for small businesses, ranging from a self-employed farmer to a small technology concern with 50 or fewer employees.
Eligibility also will be offered to many uninsured people. For example, a family of four earning less than 400 percent of the poverty level – about $88,000 – will be eligible for an insurance subsidy to help defray the cost, according to the Washington Policy Center.
Anything to lessen the onerous task of shopping for coverage and awarding small businesses some help will be a welcome change, said Janine Vaughn, owner of Revival Lighting in Spokane. She spends weeks each year fretting over the rising cost of insurance for her 11 employees and aggressively shopping to save money.
“I strongly believe that we need to provide health insurance for our employees,” Vaughn said.
And yet over the past several years she has switched insurers several times in search of the best deal. Still, the cost of covering her employees has more than doubled while deductibles have soared from $100 to $2,500.
When compared to the year-over-year sales and profits of her business, such health insurance inflation is absurd, Vaughn said.
Her business had to quit offering coverage to the spouses and children of employees, a decision she regrets.
“The costs made it impossible,” she said.
So Vaughn has embraced health reform as the best alternative for small businesses. The law already offers incentives to help defray some of the costs, and she holds out hope the exchange will deliver greater buying power by pooling businesses together to drive better insurance bargains.
Donna Steward, a government affairs director for the Association of Washington Businesses, worries the exchange will backfire.
The business association wanted a thorough and critical analysis of setting up an exchange, including a clear understanding of its duties and responsibilities. Instead, the Legislature ended up passing a bill that vests too much power in the hands of the state’s health authority for setting up how the exchange will work, Steward said.
“We worry that the duties of the exchange will be overreaching and therefore the cost of it will have to be borne by taxpayers and it will be astronomical,” she said.
Other criticisms include a concern that creative or specially tailored policy offerings from carriers will be restricted; and that the exchange will end up as another onerous business mandate that ultimately will make coverage more expensive or require taxpayer dollars to help it operate.
Though the exchange is now set up, Steward said the business association will work hard to study and critique the plan and inform the Legislature next year about its concerns and what changes may be appropriate.
Leaders of the Democrat-controlled statehouse laud the exchange as a forward-looking move that gives Washington an administrative stake as federal reforms take hold.
The Washington Policy Center said, “Done right, the exchange should be easy to use and should promote decreased health care costs. Insurance rates and benefit levels should be set by the insurance market and not by government regulations.
“The administration of the exchange should be done through a non-political, independent board, not by a politicized bureaucracy.”
While the bill collected support from some Republican legislators, it has earned plenty of skepticism and ire from those opposed to any acquiescence in the fight to repeal what they call “Obamacare.”
Freshman state Sen. Michael Baumgartner, R-Spokane, voted against establishing the exchange.
“I just don’t think this is the kind of thing we need to address right now,” he said. Baumgartner referenced the federal lawsuit filed by attorneys’ general in many states that seek to declare the health reform law as unconstitutional. Washington Attorney General Rob McKenna, a Republican, has joined the suit.
Sen. Karen Keiser, D-Kent, was the prime sponsor of the exchange creation bill and said it was the best way for Washington to prepare for health reform.
“This is a major step towards achieving affordable coverage for all Washingtonians,” she said in announcing that the bill had passed with bipartisan support.
The Washington State Hospital Association supported setting up an exchange as a way to assert some state control as federal reforms take root. But the association was disappointed that the board in charge of setting up the exchange’s duties and responsibilities would not include a physician or hospital executive.
“That’s unfortunate,” said Chelene Whiteaker, an analyst with the hospital association. “We would have liked to had someone within the field of healthcare participate in something so important.”
Idaho lawmakers have so far rejected establishing an exchange that would comply with federal reforms. If states fail to build exchanges, the federal government could step in and set up an exchange and run it as they see fit.
Gov. Butch Otter, R-Idaho, has not ruled out establishing an exchange, but the state is already behind Washington and many others.
Two other states already have operating exchanges. Massachusetts set one up in 2006 to help bring down its uninsured rates. The effort has worked but costs have soared.
Utah established an exchange to serve as an electronic broker.