J. Duncan Moore Jr., Author at �鶹Ů�� Health News

Health Insurance Exchanges In Many States Held Up By Uncertainty About Supreme Court

J. Duncan Moore Jr. — Sun, 10 Jun 2012 15:15:00 +0000

This story was produced in collaboration with

CHICAGO — Illinois might seem the least likely place for the health law to get sidelined. It’s a state with a Democratic governor and solid Democratic majorities in both houses of the legislature. It’s also the political base of President Barack Obama, who championed the legislation in the face of furious opposition.

Yet even here, voters are divided on the law’s merits, and a bill authorizing creation of a state-based health insurance exchange — a centerpiece of the law designed to expand coverage to millions of people — has been stalled while state lawmakers wait to see how the Supreme Court rules.

“Our reaction to the Affordable Care Act was one of great pride that the president was able to pass something,” said Michael Gelder, senior health policy adviser to Gov. Patrick Quinn. “Yet we still are struggling with most of the states to get this legislation passed.”

With the legislative session recently ended, some speculate Quinn will act unilaterally to set up the exchange by issuing an executive order — by governors in New York and Rhode Island. Quinn’s office did not respond to requests for comment.

Creating the exchanges has been “a hard sell” in many states, even those that appear politically receptive, said Thomas Miller, a resident fellow at the American Enterprise Institute. “They have a lot of trouble actually getting to . . . completion.”

Seventeen states until the court’s decision, expected this month, according to the Center on Budget and Policy Priorities. An additional 13, plus the District of Columbia, have authorized their creation. Many of the others, including Illinois, have legislation pending.

The exchanges are supposed to function as online marketplaces where consumers can compare health plans and determine their eligibility for programs such as Medicaid or subsidies to help buy coverage. States must submit their blueprints by Nov. 16 and get conditional approval for their plans no later than January 2013 to begin enrolling residents 10 months later. If states are deemed unable or unwilling to act, the federal government must offer a federally sponsored exchange.

Rep. Greg Harris, a Chicago Democrat in the state’s General Assembly, said the tone of the justices’ questions during the court’s arguments in March “did not bode well for the individual mandate,” which many believe is a prerequisite for attracting enough healthy people to the exchanges to enable the plan to function well.

The uncertainty has led to “hesitancy by a lot of the players,” Harris said. “Will it be a narrow decision or will it be a broader decision? Before you write something into law that is going to be so sweeping, you like a little predictability.”

Illinois officials estimate nearly 800,000 uninsured residents would get public or private health insurance through the exchange in 2014, climbing to more than 1 million by 2020.

Although state agencies can do most of the planning, they need legal authority from their state legislatures to authorize the setup. “It’s a great incentive for procrastination and delay,” Miller said. “Despite periodic attempts by Health and Human Services to say, ‘Here’s what it might look like,’ or ‘Try this version,’ states simply grunt at them.”

That’s as true in Illinois as elsewhere; 45 percent of the state’s voters support the law and 45 percent oppose it, according to a Chicago Tribune/WGN poll in February, “Our elected officials are keen on not deciding something that can be decided for them,” Gelder said.

The policy of no cooperation by the national Republican leadership, which local Republican officials have endorsed, has also made it harder to move ahead because some Democrats are reluctant to take a party-line vote on a controversial issue.

“Democrats may be wary of making unpopular votes with some of their constituents, only to have Obamacare struck down by the Supreme Court,” said Michael Lawrence, a decades-long observer of Illinois politics and press secretary to former Gov. Jim Edgar, a Republican.

“Neither side wants to take the political risk,” said John Bouman, president of the Sargent Shriver National Center on Poverty Law in Chicago, an advocacy group for low-income people. “Republicans don’t want to put any votes on it,” and Democratic leaders of the Assembly and Senate didn’t want the vote to go down as a partisan split, so they put the bill aside for the time being, he said.

It’s not as if state officials don’t have plenty on their plate trying to resolve the state’s parlous fiscal condition, including billions in unpaid Medicaid bills and unfunded public pension liabilities. The exchange bill doesn’t rise to the same level of necessity, Lawrence said.

“I don’t have the sense that this issue of establishing a health-care exchange is going to be big on the radar screen when Illinoisans go to the polls in November,” he said. On the other hand, “the situation could look different if the Supreme Court upholds Obamacare.”

In recognition of the political and technical challenges confronting many states, the Department of Health and Human Services recently offered some new options. In addition to the tailor-made state exchange or a one-size-fits-all federal exchange, there is now a third option: a “state partnership exchange” with the federal government, where HHS would assume activities the state was unable to handle.

“They’re going to be happy in the White House if they have a dozen states that can limp to the starting line,” Miller said.

�鶹Ů�� Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at �鶹Ů��—an independent source of health policy research, polling, and journalism. Learn more about .

This article/insurance/health-insurance-exchanges-scotus-illinois/">article; first appeared on �鶹Ů��" rel="nofollow">">�鶹Ů�� Health News and is republished here under a

/?republication-pixel=true&post=23317&ga4=G-J74WWTKFM0" style="width:1px;height:1px;">

Illinois Insurance Chief Sees Market Becoming More Concentrated – The KHN Intervew

J. Duncan Moore Jr. — Wed, 27 Apr 2011 00:30:00 +0000

Michael T. McRaith, the Illinois director of insurance since 2005, was last month by the Obama administration to become the country’s first director of the , a post created through the passed last year to against another financial meltdown.

McRaith was for many years an attorney in private practice, working at the intersection of financial services, insurance and consumer protection. He used his tenure with the state to beef up consumer safeguards in Illinois and to prepare the way for the health care overhaul. He will remain in his Illinois post until the end of the May.

McRaith

The new insurance office was established to advise the secretary of the Treasury on domestic and international insurance issues and consult with state insurance regulators. As director, McRaith will not be involved with health or long-term care insurance.

McRaith, 45, was interviewed by J. Duncan Moore Jr. in March, shortly before his appointment was announced. At the time, he declined to talk about speculation that he might be the nominee, saying only that “the creation of this office is a significant step forward for the country.” Here is an edited version of the interview.

Are insurance markets becoming more concentrated around major players?

We have seen in Illinois a shift occurring over 10 to 15 years. Some years ago, our health insurance market was two-and-a-half times more competitive than it is today. It was less concentrated in the top carriers, with more diffusion among private payers. These changes predate the Affordable Care Act [that overhauls the nation’s health care system]. It’s becoming more difficult for the state or regional health insurers to remain viable. This is occurring in every state.

What are the implications of increased market concentration?

Two things. First, as health insurers increase market share, their leverage over providers [including doctors and hospitals] increases. That increased leverage can lead to reduced reimbursements to the providers. That’s one source of conflict.

Second, as we move away from a fee-for-service model to what is known as the [in which doctors are paid flat, per-patient rates], we can expect more emphasis on quality of care. We expect insurers will be incentivizing those providers who satisfy some objective measure of quality care.

Up until now, payers have made profits by excluding sick people. After 2014, under health reform, they can’t do that anymore. How does this change their business model? How will they add value?

The definition of success has to change. We have insurers operating in Illinois who have cumulatively collected more than $28 billion in surplus capital as of 2010. In this transition period to 2014, insurers are increasingly aggressive with their underwriting, meaning they are increasingly aggressive in denying coverage, limiting coverage or denying or limiting any one claim.

They are using the absence of rate regulation to price out existing policyholders. That is designed to lead to the accumulation of capital, so that by 2014, when insurers have to cover everyone, they’ll be starting from a point of extreme financial strength.

The new business model on the private payer side will have to be more lean. As a result we do think the responsible insurers will be emphasizing quality of care. They will attempt to shift some risk to providers and away from fee-for-service to the global payment arrangements.

Are you hearing anecdotal stories from consumers?

We sure are. People in the pre-Medicare age have a lot of trouble receiving individual and family coverage. Historically someone in that group would receive an offer of coverage with exclusions. Now we’re finding that person is not receiving an offer.

We’re also hearing from small employers whose premiums are increasing 30 percent to 40 percent. In one case a small business of personal trainers, where the average age was 31 – five of them in a high-deductible plan, and no one in the group met the high deductible – their premiums were increased by 35 percent.

Are the payers trying to get rid of these people? Or do they think they can really capture an increase this large?

The publicly traded insurance companies had profits in 2010 significantly higher than 2009.

In 2014, when pricing and denial can no longer be based on health status, the insurers are going to be successful based on the ability to market their products, and price the products accurately. That will be very different from today, when the prices don’t have to be connected to the actual risk of the individual.

Under the federal health law, insurers must spend at least 80 percent of their premium revenue on medical care. Is this realistic? Won’t insurers be able to game this?

The National Association of Insurance Commissioners has worked to develop a standard by which the 80 percent will be judged. It’s not ideologically driven. The numerator is payments by insurers for health care. The denominator is premiums paid to insurers, less taxes.

We expect most responsible companies will adhere to the standard.

The number, 80 percent, is high for many companies. For policies covering small employers and individuals, it is very difficult to satisfy. The larger insurance companies, the United Healthcares and Blue Crosses, can get to it more easily (because they have huge economies of scale). For large group policies, the threshold in the law is 85 percent. It’s much easier to hit a loss ratio of 85 percent if you are covering 5,000 to 10,000 people in the group.

Longer versions of this interview appeared in the

��Ի�

issues of

, a publication covering health care business and policy news.

This article/insurance/moore-mcraith-office-of-insurance-on-reform/">article; first appeared on �鶹Ů��" rel="nofollow">">�鶹Ů�� Health News and is republished here under a

/?republication-pixel=true&post=27293&ga4=G-J74WWTKFM0" style="width:1px;height:1px;">