Former head of Massachusetts health exchange says it's better to offer fewer, well-defined plans than set general criteria

With  Kentucky stakeholders discussing their options to set up a state-run health insurance exchange — something Gov. Steve Beshear said last week he intends to do if the Affordable Care Act is upheld by the U.S. Supreme Court — research shows the fewer plans offered in the exchange, the better.

An article in Health Affairs says officials should follow the lead Massachusetts' health-reform system when creating their own exchanges. "A hands-on exchange with the power to set standards on top of the federal health-care law will help prevent consumers from being 'overwhelmed' by the process of buying insurance," reports Sam Baker for The Hill's global affairs blog.

The Health Affairs article's lead author, Rosemarie Day, is a former deputy director of the Massachusetts exchange. She said consumers prefer choosing from "a handful of carefully vetted, clearly described health-care plans," Baker reports. The model used in Utah to allow any plan that meets criteria to be featured in the exchange is less popular, the paper found, but was more popular among conservatives.

"Findings from consumer research emphasized the value of limiting insurance plan choices on the exchange," the analysis states. "Specifically, early focus groups showed that consumers wanted four to six carrier options at 'low, medium and high' benefit levels." (Read more)

Tea Party protesters object to state-run health insurance exchange; leader says if there is one, feds should run it

By Tara Kaprowy
Kentucky Health News

A public meeting in Frankfort to get stakeholders' input about development of a state-operated health insurance exchange Monday was attended by dozens of Tea Party activists taking issue with Gov. Steve Beshear's intention to create it.

"It was absolutely a formal protest," said organizer David Adams, who writes the blog Kentucky Progress and managed Louisville businessman Phil Moffett's campaign for the Republican nomination for governor last year. "We are very, very strongly opposed and we're just getting started with our protest."

Last week, Beshear announced his intention to create a state-run exchange if the Affordable Care Act is upheld in the U.S. Supreme Court. Since 30 million Americans who don't have coverage now would be required to buy insurance under the law's mandate, the exchange would act as a marketplace in which individuals and employees of small business can choose from several plans that have coverage packages pre-approved by state and federal governments. The people buying from the exchange would be given subsidies to help pay their premiums.

States have the option to create their own exchange or have the federal government run one for them. Through February, Kentucky had received nearly $60 million to help set up an exchange, money officials said would be used for planning.

Several major business lobbies have said the state should have its own exchange, but Adams argues that if there is an exchange, the federal government should run it.

"This idea that if the state does it then we have some kind of control is like saying since we run Medicaid, we have control over Medicaid, which is absolutely not the case," he said. "If we have a state-run health insurance exchange, we will run it in the exact way that the federal government wants us to." He said he fears that once a state-run exchange is set up, "when federal funds run out, we'll be responsible for financing it."

"There is a place for helping people who absolutely can't help themselves," Adams acknowledged, but since people with an income of up to 133 percent of the federal poverty level qualify for the exchange, "We've changed the definition of who can't help themselves. We've moved that line way up into the middle class. In every part of life that we've done that, that has been very counter-productive."

Though the Supreme Court's decision about whether to uphold the mandate won't be known until June, Adams said he felt it was necessary to protest Monday's meeting "to demand that the government send back the $60 million and stop any activities of setting up an exchange." "I don't think anybody really believes that we need $60 million in federal grant money to set up a website to help people buy health insurance," he said. "We need to return that money and operate on a more fiscally feasible path."

In response to a question, Adams said the protest was not held to stir anti-Obama sentiment that might help Kentucky Republican candidates in the November elections. He said the insurance exchange is "just the tip of the spear" and that "the best thing we can do in managing our health care problems is stop going in the wrong direction."

Kentucky Health News is a service of the Institute for Rural Journalism and Community Issues, based in the School of Journalism and Telecommunications at the University of Kentucky, with support from the Foundation for a Healthy Kentucky.

Beshear says he will create state health insurance exchange if federal health reform law is upheld

Gov. Steve Beshear said today that he will wait on creating a health insurance exchange under federal health reform until the U.S. Supreme Court rules on the constitutionality of the reform law, which is expected to happen in late June. He said in a press release, “The steps we have taken to date, and the planning process we are putting in place helps ensure the state is able and ready to follow the law.”

The exchange, a requirement of the Patient Protection and Affordable Care Act, would be a market for individual health-insurance policies. It would help small employers insure their employees in health plans and "enable individuals to receive premium tax credits and premium subsidies, and qualify small businesses for tax credits," the release said.

"The state has a $57.8 million federal grant to plan and implement of programs and systems required by the law, including "building an end-to-end eligibility and enrollment system to serve both Medicaid and exchange participants," the release said. "Kentucky previously received two federal health insurance exchange planning grants totaling $8.6 million." (Read more)

With time running short, why wait to issue an order? The court's decision "may impact the nature of the executive action," said Jill Midkiff, spokeswoman for the state Cabinet for Health and Family Services. "The timing of issuance of the executive order will not impact the current work or future work that is being completed to establish a state exchange. There is nothing that we need to accomplish at this point that requires an executive order to be in place."

What's the status of a health insurance exchange in Kentucky?

By Tara Kaprowy
Kentucky Health News

At the end of February, Kentucky received $57.8 million in federal funds to help set up a health insurance exchange or marketplace under federal health-care reform. Officials say all the money will be used to plan for a potential exchange, even though lawmakers have made no move to introduce legislation to create one.

Jill Midkiff, spokeswoman for the Cabinet for Health and Family Services, said Kentucky has hired a planning vendor "to develop a list of detailed requirements and a potential operating model that is specific to Kentucky's information systems environment."

The exchange is meant to act as a marketplace in which individuals and employees of small businesses can shop and compare several plans that have coverage packages pre-approved by the state and federal governments. Medicaid recipients will also be able to get their insurance from the exchange. Right now, it has not been decided what plans will be offered, Midkiff said. It's also unknown if the plans in the system will be available to everyone or if there will be some plans only available to Medicaid recipients and some only for individuals who qualify.

Who would qualify? People with an income of up to 133 percent above the federal poverty level — now $14,404 for individuals and $29,326 for a family of four — will qualify for Medicaid starting in 2014. Also, the federal government will give subsidies to help Americans whose income is up to 400 percent above the poverty level. With them, they must buy private coverage through the exchanges.

Kentucky has until Jan. 1, 2013 to create a state-based exchange. If lawmakers do not introduce and pass legislation that will create an exchange, the state has two options. It can allow the federal government to operate the exchange or Gov. Steve Beshear can issue an executive order to create one. Beshear "has taken a wait and see approach to exchange planning, neither explicitly endorsing nor refusing to implement a state-run exchange," reads a state-exchange profile put together by the Henry J. Kaiser Foundation.

Kentucky started planning for an exchange in September 2010 and received a total of $8.6 million to do so prior to receiving the $57.8 million grant. Midkiff pointed out most of the activities for this latest grant "must be completed regardless of whether the state or federal government operates the exchange."

Last September, state officials said the delay in setting up an exchange was largely because the federal government had not decided what benefits needed to be offered in the exchange. In December, the Obama administration put the onus on states to come up with their own regulations pertaining to what benefits insurance companies have to offer. When asked if the change has allowed Kentucky to move forward, Midkiff said the Cabinet for Health and Family Services is working with the Department of Insurance to review the new dictate.

While the state does not have an estimate of how many people will use the exchange, Julia Costich, chair of the Department of Health Services Management at the University of Kentucky, said her research shows about 400,000 Kentuckians will be eligible for federal subsidies. After coverage expands, she estimates about 1.1 million Kentuckians will be eligible for Medicaid.

So far, 30 states and the District of Columbia have received grants to set up exchanges. Of those, only 13 and D.C. have adopted a plan for how to proceed.

Kentucky Health News is a service of the Institute for Rural Journalism and Community Issues, based in the School of Journalism and Telecommunications at the University of Kentucky, with support from the Foundation for a Healthy Kentucky.

Kentucky receives $57.9 million to set up insurance exchange

Kentucky received $57.9 million Wednesday to help set up a health insurance exchange or marketplace — though lawmakers have made no move to make that happen. Kentucky is one of 10 states to receive this latest round of federal insurance exchange establishment funds, which totals $230 million. Of these 10 states, Kentucky received the highest sum by several million.

Of the 10 latest states to receive grants, seven of them have adopted a plan or made substantial headway, reports Richardo Alonso-Zaldivar for The Associated Press. In the exchange, considered one of the cornerstones of the new health care law, individuals and employees of small businesses can choose from several plans whose benefits coverage packages have been pre-approved by the state and federal governments.

So far, 30 states and the District and Columbia have received grants. Of those, only 13 and the District of Columbia have adopted a plan for how to proceed. States have until Jan. 1, 2013.

"Kentucky has not determined whether it will establish a health benefit exchange in light of challenges to the Affordable Care Act and the lack of federal guidance and a tangible federal exchange model to consider," said Kerry Richardson, communications director for the Office of Gov. Steve Beshear, said at the end of January. "However, impending ACA deadlines require considerable planning, evaluation, design and development of systems to address exchange issues whether the state or the federal government operates the exchange, and we are engaged in those efforts."

In September 2010, the Kentucky Cabinet for Health and Family Services' Office of Health Policy received a $1 million exchange planning grant. In August, it received another $7.7 million to fund information technology systems. No bill has been introduced that would establish a state-based health insurance exchange so far. (Read more)

Health insurance exchange benefits will be decided at the state level; Kentucky can now proceed to set up its exchange

For months, Kentucky officials have said the state cannot move forward with setting up a health-insurance exchange under the new federal health law because there weren't enough details about which benefits they had to offer. On Friday, the Obama administration answered that question when it "let states, rather than the federal government, define which medical benefits insurance companies will have to offer consumers starting in 2014," reports Noam L. Levey of the Los Angeles Times. "This is significantly more state-flexible and friendly than many would have expected," Alan Weil, head of the National Academy for State Health Policy, told Levey.

The law says that by 2014, each state must offer an insurance exchange, an online insurance marketplace in which people can choose from a variety of plans from companies like Anthem or Bluecross/Blueshield and then, for the most part, be given federal subsidies to help pay their premiums. About 30 million individuals and employees of small businesses are expected to use the exchanges. The plans in an exchange must cover a basic set of benefits, including hospitalizations, emergency care, newborn and maternity care and pediatric services, but until now the federal government could have decided how generous the benefits had to be.

"Under the guidance issued Friday, state leaders can define their own set of benefits by using an existing major health plan in their state as a benchmark," Levey reports. "That means that some states may require insurers to cover services such as chiropractic therapy and in vitro fertilization, while others may not."

It's this variability between states that worries some. "In passing a good deal of the decision-making to states, the administration has guaranteed that Americans will continue to face a patchwork of state regulations that make coverage uneven and inefficient," report Gardiner Harris, Reed Abelson and Robert Pear in a news analysis for The New York Times.

Some consumer advocates also worry the move will allow states to make benefits too meager. Timothy Jost, a law professor at Washington and Lee University, said the policies "could restrict, for example, the number of covered visits a pregnant woman could make to her obstetrician or which prescription drugs to pay for."

However, by passing the responsibility on to the states, "President Obama will most likely make his plan for health care reform more politically palatable," the Times reporters write. "States will be allowed to set benefits at levels similar to what they are now, making coverage not much more expensive than it is today."

While some Republican state officials were happy with the decision, saying it makes it easier for states to comply with the law, others opposed to the law were critical. "All they're trying to do is avoid making tough calls before the election," said Ed Haislmaier, a senior research fellow at the Heritage Foundation. (Read more)

States all over the map in setting up health insurance exchanges; Kentucky officials say they await more federal guidance

A breakdown of where states stand in implementing pieces of the federal health-care reform law shows Kentucky lagging behind. But Kentucky officials say they're awaiting more direction from the federal government before they decide their next move.

A map compiled by the Center for Budget and Policy Priorities shows Kentucky is one of 11 states that did not even introduce legislation to form a health insurance exchange, considered one of the cornerstones of the new health care law. The center says 33 states have considered bills to establish an exchange, and 10 passed. Another nine have approved bills declaring the state's intent to establish them.

The state exchanges, which are to be launched in 2014, will act as insurance marketplaces. In the exchange, individuals and employees of small businesses can choose from several plans from companies such as Anthem or Bluecross/Blueshield, whose benefits coverage packages have been pre-approved by the state and federal governments.

As part of the new law, individuals with income as much as 400 percent above the poverty level may qualify to buy insurance from the exchange. Individuals that do qualify will be given federal subsidies to help pay their premiums, subsidies people can only get if they buy their insurance through the exchange. "They'll be incentivized to buy their insurance through it," said Carrie Banahan, executive director of the Office of Health Policy in the Cabinet for Health and Family Services.

So far, though, Kentucky has not made any moves toward setting up its exchange. Banahan said that is largely because the federal government has not decided what benefits the plans in the exchange must include. "They'll basically set up a minimum of what these plans need to include," she said. "We're still awaiting federal guidance."

Asked if the administration of Gov. Steve Beshear is delaying action so the health-care law won't become an issue in the Nov. 8 election, in which Beshear is seeking a second term, chief cabinet spokeswoman Jill Midkiff replied in an email, "The federal government has not issued final guidance through regulations on the exchange. States cannot make decisions to establish an exchanghe without knowing the requirements in order to determine programmatic and financial implications."

If states don't set up an exchange on their own, the federal government will do it for them, though Banahan said Kentucky officials are reluctant to let that happen. "The federal government is encouraging states to operate their own exchanges," she said. "They're looking at states to take the lead so they can model and craft their own exchange to meet the needs of their state. If the federal government came in, they don't know Kentuckians like we know Kentuckians."

As indicated by the map, several states have chosen to create an exchange by passing legislation. In some others, governors have done it through executive orders. Banahan said there is still time for Kentucky to weigh its options. "We haven't missed the boat," she said. "We're still just looking ... No final decisions have been made."

Other states' decisions do not necessarily follow party lines. Nevada and California passed exchange bills under the leadership of Republican governors. Delaware and Rhode Island, which have Democratic governors, have not budged on exchange legislation.

Only Florida and Louisiana have "expressly stated they won't build the marketplace," Sarah Kliff wrote for The Washington Post. Both have Republican governors, "But there are a lot of other states in the gray area above that could fall either way. If a few larger ones like Texas or New York aren't able to move forward in the next year or so, that's going to have the federal government playing a really big role in setting up what was meant to be a state-based law." (Read more)

Ultimately, whether Kentucky sets up its own exchange or the federal government does, Banahan said an exchange is needed. "We think it's a good thing that more people will have health insurance accessible to them," she said.