While 2012 campaign unfolds, states grapple with health insurance exchange plans

A critical underpinning of the healthcare reform law is being fought not in the nation’s capital, but in the states.

That would be individual state’s health insurance exchange (HIX). This contentious segment of the Patient Protection and Affordable Care Act (ACA) is caught in a firestorm of political crosscurrents. Some states, such as Wisconsin, actually started work to ultimately stand up an HIX – only to abandon that effort and return the federal funding. Maryland and others are moving forward. And others still are trying, in the governor’s mansion, but meeting formidable resistance in the legislature.

What with Republican presidential hopeful Mitt Romney frequently reasserting his plans that Day One in office, if elected, would entail signing an executive order to grant all 50 states waivers that essentially serve as get-out-of-health-insurance-exchange-free cards, the future of HIX appears troubled.

And if President Obama is re-elected? Well, as the federal overreach part of the Republican’s argument against the ACA, and something that states have the right to decline funding for, HIX might not fare much better under a Democrat than a Republican.

Health insurance exchanges, meanwhile, are the prime example of how partisan politics can effectively inhibit health reform and the information technology underpinning it – something that started almost immediately after President Obama signed ACA into law in March 2010.

Yet the success of health reform is dependent on health insurance exchanges.

Tracing it back to the mid-terms 

While the road to this year’s presidential election grabs the headlines, it is the effect of the 2010 mid-term elections for state legislatures and governors that has shaped how states are driving forward or sliding behind in applying the health reform law, most notably the establishment of health insurance exchanges.

The dizzying swing to the right in 2010 led some states, like Kansas, to balk at an insurance exchange, while some, such as Iowa and Wisconsin, set work aside until the Supreme Court rules in June on the constitutionality of ACA -- an approach that will leave little time to accomplish what is needed to be operational by 2014.

Other states have plowed ahead. Arizona, Maryland and California, among those, are taking on the policy, political and economic work to establish their exchanges.

The project is “not for sissies,” said California Health Benefits Exchange Board member Kimberly Belshe, adding that tasks tend to be even more enormous in practice than on paper. Belshe, a senior policy advisor at the Public Policy Institute of California, spoke at a recent conference roundtable with other state exchange officials. She was also secretary of the state’s Health and Human Services Agency under former Gov. Arnold Schwarzenegger.

California and Maryland have each received about $40 million in federal grants to plan, establish and innovate IT systems to get their exchanges off the ground.

States like California and Maryland have assembled stakeholders representing providers, payers, consumers, vendors and public policy groups to outline what an exchange should do and develop the rules of the road, sought legislative approval where needed and collaborated with Medicaid and other state health agencies on eligibility and enrollment systems.

Iowa and Kansas joined the Florida-led lawsuit challenging the constitutionality of the ACA when newly elected Republican governors took office in January 2011.

Mired in legislation
Kansas dug in its heels around all things health reform, according to Robert St. Peter, MD, president and CEO of the Kansas Health Institute, an independent researcher for state policymakers.

Kansas Gov. Sam Brownback returned to the government $31 million for an early innovator grant to work on insurance exchanges. The legislature passed a bill opposing the requirement of any Kansan to purchase insurance or be in the state healthcare system. And Kansas did not apply for pockets of grant money available through ACA, such as community transformation grants, St. Peter said.

While Kansas received an initial $1 million grant for planning an exchange, legislation was introduced to make it difficult for the insurance commissioner to spend the remainder of the money.

Kansas sought and was denied a waiver to the 80/20 requirement on the medical loss ratio. In January, the state administration submitted a comprehensive waiver to totally change the Medicaid program and incorporate all its populations into managed care, St. Peter said. The largest insurer in the state was not bidding on that Medicaid contract, although five bidders have since come forward on the KanCare contract.
“All of that, and then we lost our top three Medicaid administrators in the state,” St. Peter said.

Upon taking office, the new Republican governor in Iowa immediately signed on to the health reform lawsuit but still wanted to be able to receive some of the grant money, said Susan Voss, Iowa insurance commissioner for the past eight years. Gov. Terry Branstad is committed to going forward, and Iowa has received a total of $8.7 million to consider options for an exchange.

But the legislature has not passed related legislation. “We can’t seem to get to square one,” Voss said. “I think given the politics we have, a lot of conservative folks in the legislature say they don’t want the federal government in their business, so they’re not going to pass the exchange. But if the legislature doesn’t pass the exchange, the federal government is in their business. The governor says let’s have a plan so that we can get moving.”

Last year when Iowa was dealing with the rate-review issues in ACA, however, the legislature passed into law a section in the state insurance code that said the insurance commissioner may implement any portion of the ACA by rule.

“So we’re trying to figure out what we’re going to do. Under sunshine laws, if we have a meeting, it has to be open,” Voss said. Meanwhile, Iowa is gathering ideas about the exchange and hired consultants to do studies.
“We don’t even know what kind of system we would have, who would be in it, and what the essential benchmark package would be,” she said, adding, “they’re all waiting until the Supreme Court decision comes out.”

That ruling, expected at June’s end, will occur after the legislature leaves, potentially exacerbating the time crunch states are already up against.

“I worry we’re going to get to this summer, and then there’s going to be a scramble at the same time that the election is going on, and that really does take away from getting people to come to the table,” Voss said.

People’s expectations will be high that the exchange is going to be beneficial and helpful. “But we’ve got to get it right, or close to the end zone,” she added.

No wrong door

California policymakers have understood that it makes sense to advance a state insurance exchange. The exchange will serve as a gateway to coverage to millions of uninsured and a means to help organize the insurance marketplace in a way that plans will compete more squarely on price, quality and service, according to Belshe.

The exchange offers the opportunity to deliver more value through better quality and affordable products by actively purchasing on behalf of individuals and small businesses.

Updating the eligibility and enrollment systems has been a major focus for the past several months.

”The success of reform, in many ways, is dependent on how well we do in identifying, enrolling and retaining people in coverage,” Belshe said. “It’s instrumental in terms of the financial viability and affordability of the products that we offer and our leverage in the marketplace.”

The vision of “no wrong door” for enrollment means millions of people will have their eligibility determined in real time and with a top-notch customer experience through any health and human service program. That is significantly different from how public programs operate today, she said.

Currently, California has multiple county and state information technology systems, and nearly 30,000 county eligibility workers to determine eligibility and to enroll people in Medicaid and other human services programs, as well as a separate system for the Children’s Health Insurance Program (CHIP). Applicants will also have an online self-service option, which can free up some of the county workers to focus on the most difficult cases.

“We have to simplify and streamline these systems and processes, change business practices, and do so in a way so it can bring in millions of additional people who are extraordinarily diverse in terms of their cultural, linguistic, educational, economic, and health status,” Belshe explained.

The IT infrastructure will reflect that. It will have to provide a customer-centered enrollment experience that can accommodate the very different needs of various categories of consumers and streamline that end-to-end process for securing and retaining coverage.

The exchange board believes that health reform in California extends beyond coverage. “We really need to be held accountable for how we can achieve better value and lower costs because if we can’t get costs under control, then the work we’re doing fundamentally is not sustainable,” Belshe said.

High-stakes HIX

The stakes are also very high around health plan participation standards and delivery system improvement strategies. California standards will exceed the federal minimums and the state will be an active purchaser. 
“We estimate that we will be purchasing from 7 to 15 percent of the overall market. So we’ve got some leverage in the marketplace,” Belshe said, including important tools, like selective contracting and the ability to standardize benefits.

In Maryland, Democratic Gov. Martin O’Malley was re-elected in 2010 and has made establishing a health insurance exchange a priority.

Maryland is working on the preparations to link up its eligibility system with the exchange with real-time access and real-time online enrollment. “This is a paradigm shift, and it is very complicated,” said Charles Milligan, Jr., deputy secretary for healthcare financing in the Maryland Department of Health and Mental Hygiene.

In forging the relationship between Medicaid and the exchange, it’s not simply the eligibility front-end, making sure that people get into the program that’s right for their eligibility, “but we’re also looking to work with the exchange about continuity of care as people move around providers,” Milligan said.

In Maryland, one half of the population in Medicaid will fall out of coverage because of a slight change in earnings and cross over into the exchange in the course of a year. The state is concentrating on alignment at the care level among providers to accommodate that churn, Milligan added.

A patient might be in the middle of chemotherapy, for instance, or pregnant or have a chronic illness and be on eight medications that took a lot of trial and error to get accustomed to, or scheduled surgery.

The exchange will also transform how safety-net providers operate. Providers, such as free clinics, federally qualified health centers and community health centers, are unaccustomed to working with insurers, Milligan said. They will take care of the same patients, but now those patients will have an insurance card. The providers must be prepared to get credentials and understand claims and authorization, build competencies in their front office, and establish electronic health records.

A lot of covered benefits that have been grant-funded will become part of essential health benefits and these safety-net providers may need as part of their strategic business plan to build relationships with commercial carriers because they’re seeing people at 150 percent of poverty.

Golden spike, no guarantee

Getting the IT system ready in time is a major concern for states. The federal government can help facilitate that, however, with final guidance and information on what the federal data services hub is going to look like and when it will be ready, Milligan said.

The federal government is building on existing services and developing a data services hub that collects the federal data to verify eligibility, including IRS tax records, citizenship records from the Homeland Security Department and the Social Security Administration. States will use standards to connect those services with their state eligibility system.

“We’re going to be driving the golden spike in the railroad somewhere along the way,” Milligan said, “and we need the federal government to be there and meet us.”

Whether the federal government will, or will not, be there to help states depends on a number of factors – ranging from the pending Supreme Court ruling, the presidential election come November, and on down to state legislatures, where the real battles are being fought.

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