Wednesday, April 20, 2011

State health care exchanges reflect politics as usual

Leaders of states across the land are anxious to establish their own health care exchanges, but their reasons for wanting to do so certainly vary. Many would like to get their hands on available federal funding as soon as possible, and others, conversely, want to give the appearance that they are avoiding compliance with the ACA for as long as possible.

For more information. For a comprehensive analysis of the Patient Protection and Affordable Care Act, and additional information on health reform and other developments in employee benefits, just click here.

Oklahoma governor Mary Fallin initially accepted a $54 million  federal “Early Innovator Grant” but then turned it down, perhaps bowing to pressure from fellow Republicans. Fallin has now announced that her state will establish a “Health Insurance Private Enterprise Network” in order to prevent the establishment of a federal health care exchange.  According to Fallin’s website, the state’s new exchange will be based on a concept by the conservative Heritage Foundation and legislation passed by the Oklahoma Legislature in 2009. On her website, Oklahoma Senate President Pro Tempore Brian Bingman is quoted as saying  “This private enterprise network not only offers the people of Oklahoma more options when buying insurance, it will serve as a defensive strategy that protects Oklahoma from the federal health care law. 

It remains to be seen how well Oklahoma will handle its exchange. Some other states’ recent actions on the health care front have, so far, been questionable. The Georgia legislature recently passed H.B. 47, which would permit the sale in Georgia of health insurance policies that have been approved in other sates. The reasoning of Georgia’s Republican party is that allowing the sale of health insurance across state lines will drive down costs and promote competitive pricing.

Others aren’t so sure. Georgia has a rather strict set of standards for health insurers, which includes mammogram coverage and 48-hour hospital stays for new mothers and babies. Policies sold across state lines would presumably not be subject to those standards. It would be safe to assume that Georgia employers will opt for cheaper out-of-state coverage for their employees.  You have to wonder, what were Georgia’s Republicans thinking when they enacted  this provision? Under the ACA, preventive services recommended by the United States Preventative Services Task Force, such as mammograms and colonoscopies, will be covered, free of charge. So, it's a good thing Georgians have ACA implementation to look forward to, because, if left up to Georgia state legislators, those services might not be covered.

Michigan has come up with a reasonable effort to establish an exchange, mostly to try to phase in coverage for uninsured citizens with pre-existing conditions until full coverage is available under the ACA in 2014. Its new system is called HIP Michigan, but the prices listed at seem quite steep. It’s hard to understand how the average low-income uninsured individual or family could afford the new coverage. For example, according to the HIP Michigan website, the State of Michigan estimates that an average 49 year-old’s total monthly medical costs can be expected to be approximately $1,056.56, so, the state reasons, the monthly premium under the HIP plan of $211.80, plus a $3,500 annual deductible is a relative bargain. It’s hard to image too many low-income households will be able to come up with that kind of money, however. And, the $211.80 figure is for the cheapest plan offered. Two other plans, for a 49-year old, run $252.06 and $350.08 per month.

Finally, Iowa was close to coming up with its own exchange, but one senator, Democrat Tom Rielly, who is also an insurance agent, reportedly managed to get a provision added that would guarantee licensed insurance agents a five percent commission on the cost of coverage. To get into an exchange, an Iowa citizen would have to utilize the services of an agent. The legality of that provision is questionable, and Iowa's attempts to establish its exchange have reportedly stalled.


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