Health insurance exchanges begin to take shape

Posted Nov. 07, 2011, at 5:51 a.m.

From insurance companies to drug stores to doctors, just about any industry that touches the health-care system has a different opinion on how the Obama administration should shape the new insurance markets at the heart of the health-care reform law.

But they all agree on one thing: Now is the time to weigh in. The Health and Human Services Department has received thousands of comments on preliminary exchange regulations issued earlier this year, which laid some ground rules for what the new marketplace would look like.

Under the health overhaul, every state will have a new health insurance marketplace called an “exchange,” which launch in 2014. Often described as state-based “Expedias” for health insurance, the exchanges will serve as online hubs for individuals and small businesses to compare and purchase health insurance plans. Low- and middle-income Americans will also be able to use new tax subsidies on the exchange, meant to make health coverage more affordable.

Approximately 24 million Americans will eventually purchase their health insurance through these new exchanges, according to estimates from the non-partisan Congressional Budget Office. If a state does not set up its own exchange, the federal government will step in and do the job, ensuring each state has its own market.

The Affordable Care Act, passed last March, laid out some basic exchange guidelines, which detailed who would be eligible to use the marketplace and what type of coverage insurance companies would be required to sell.

But it also left many questions: Who will be authorized to sell health insurance on the exchange? What benefits will health plans have to cover? And, if states don’t set up their own marketplace, what would a federally run exchange look like?

“If we don’t get this right, we could mess up the insurance market rather than improve it,” said Judy Waxman, vice president for health at the National Women’s Law Center, a consumer advocacy group. “We really feel this is so new to most people, it’s worth laying the right ground rules.”

America’s Health Insurance Plans, which lobbies for the insurance industry, has pushed the Obama administration to leave much of the regulation to the states, which have traditionally overseen insurance market functions. More than anything though, AHIP wants more final rules from the administration, so its members can know what to plan for.

“We need to understand what the rules are,” AHIP President Karen Ignagni said in a recent interview. “It takes a great deal to make sure you’re ready. That’s one of the reasons we’ve telegraphed such a sense of urgency in our comments.”

Less obvious health industry groups also have a big interest in how the Obama administration sets the rules.

That includes pharmacy chain CVS Caremark, which has 7,200 drug stores across the country. The company has petitioned the Obama administration for rules that would allow its employees, such as pharmacists and nurse practitioners, help consumers navigate the exchange and purchase health insurance.

Part of it, the company explains, has to do with its history: when Medicare’s prescription drug benefit came online in 2006, CVS assisted seniors with enrollment through a program called “Medicare Tuesdays.” Pharmacists would set up laptops and, using a senior’s prescription history, help them pick the appropriate plan.

But it’s not just goodwill that has gotten CVS interested: the pharmacy chain believes it will increase consumer trust, leading to stronger sales in drug stores.

“We very much see ourselves playing in that space,” said Helena Foulkes, CVS’ chief health care strategy and marketing officer. “There’s a business value to it: If we’re seen as a helpful partner, we can drive more business to our stores.”

Other groups have focused on making the health exchange accessible to specific populations. Young Invincibles, which advocates for young adults, is pushing the administration to allow individuals to access the exchange through mobile devices, like smartphones and iPads. Nearly half of 18-to-29-year-olds use a smartphone as a primary source for Internet access, according to the Pew Research Center.

“Young people are obviously much more uninsured than older people,” said Jen Mishory, deputy director for Young Invincibles. “They have less access to employer-sponsored insurance. It’s important that the exchanges meet them where they are, and that’s often with a smartphone.”

The National Association of Insurance Commissioners, a group that represents each state’s top insurance regulator, discussed the issue Saturday at their fall meeting, at the National Harbor in Maryland. While the Obama administration will write the regulations for exchanges, these regulators will use those rules to set up the new marketplaces.

A half-dozen groups testified before the insurance commissioners, each running through a regulatory wish list. They ranged from the Center on Budget Policies and Priorities, a Washington-based think tank, to the Illinois Chamber of Commerce.

Laura Minzer, speaking on behalf of the Illinois Chamber of Commerce, described herself as a “relative newcomer” to the world of insurance regulation. But with exchanges online, she said it’s more important than ever for groups such as hers to get involved.

Even “small players want to be engaged in (this) process,” she told the group.

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