House health care bill in a ‘nutshell’ – the creation of the Health Insurance Exchange

Title III- Subdivision A – the Health Insurance Exchange

Sec. 310. Page 155

This section of the House bill creates the national health insurance exchange, designed to facilitate access for individuals and employers to health insurance plans in a transparent and competitive manner. The idea is to create this exchange as a means of allowing private insurers to compete with one another for customers. Since it is expected that most customers will take advantage of the exchange, this puts pressure on insurers to meet the requirements of coverage (discussed in earlier sections) for those participating in the exchange so that they too may participate. This very much benefits the consumer. One of the plans that will be available on the exchange would be the public health insurance option.

The exchange will created and overseen by the Health Choices Administration (discussed in the last post) , which is run by the Health Choices Commissioner. While the exchange will be national, it will need to coordinate with state insurance commissioners to insure that state regulations are being met.

Section 302. Page 156

This section outlines who is eligible to participate in the health exchange, what the exchange will offer and when eligible individuals and companies may participate.

Generally, any individual or company can participate except for those who are already enrolled in a qualified health benefits program or any other program permitted under the new law. So, if you’ve already got health insurance through work, you are not permitted to drop out of it and turn to the health insurance exchange to get your coverage. This is how the law continues the current system of health insurance being provided primarily by employers (thereby protecting insurance companies who sell the group policies to companies or administrate the programs of self-insured, ERISA health programs operated by large employers). Further, once you are qualified to participate in the exchange, you will remain qualified unless you take a job where you are provided coverage by your employer.

The section also sets up the ‘phase in’ to the insurance exchange.

The first year of the program will be 2013. In that year, individuals without health insurance through an employer will have access to the exchange along with the smallest employers (employers with 25 or less employees.)

In 2014, the exchange is expanded to add in employers with 50 or less employees.

In 2015 and beyond, the exchange is further expanded to in the larger employers – employers with more than 50 employees.

The section goes on to outline the health benefits programs that will be available on the
exchange:

• Qualified health benefits plans, as discussed in earlier posts.
• Grandfathered programs (programs already in existence prior to the the start of the health exchange as discussed in the post covering Title II.
• Part A of Medicare
• Medicaid
• Health coverage given to members of the armed forces
• Veterans Administration coverage

1. Other coverage such as state high risk pools, so long as they are approved by the Commissioner

Section 303. Page 167

This section creates the levels of benefit programs that may be offered in the health insurance exchange.

For a start, any plan which is offered on the exchange will have to offer the basic plan including the elements of coverage discussed in earlier posts.

If an offering entity (insurance company, etc.) offers the basic plan, they may then offer a ‘enhanced’ plan which includes the basic plan plus reduced cost sharing (lower deductible and/or co-pays.)

If an entity offers the enhanced plan, they may then offer a ‘premium’ plan, which is the basic plan with an even lower amount of cost sharing.

Finally, if an entity offers a ‘premium’ plan, they may then offer a ‘premium plus’ plan. The premium plus plan is the only one that actually would offer more benefits – not just lower cost sharing. Additional benefit examples would be adult oral health and vision (remember, that child oral health and vision are ‘basics’ that must be included in qualified plans.)

The Commissioner will oversee all of these plans offered and will have the authority to negotiate the benefits and costs of plans to be included in the exchange. Once a plan is included in the exchange, future premium increases, benefit changes, etc. will have to have the approval of the Commissioner. You start to grasp how powerful the Health Choices Commissioner will be as the position will have power over both price and the quality of the qualifying programs that participate in the exchange. this gives the federal government some serious control over participating health plans.

One interesting provision allows the Commissioner to enter into a contract with a plan on a ‘national’ basis. This speaks to the GOP complaint that insurance should be permitted to sell cross state borders. Under the proposed law, so long as a plan is registered and licensed in each state, and is approved for participation on the national exchange, the entity offering the plan can sell it nationwide.

Another ‘tidbit’ likely to engage controversy is a provision that prohibits a company offering coverage on the exchange from discriminating against health care providers or facilities because the provider is willing – or unwilling – to provide abortions.

Sec. 304-306, page 183

Mostly technical, setting out the Commissioner’s power to spread the word about the existence of the exchange, create annual enrollment periods and those entitled to automatic enrollment.

Sec. 307, page 195

Creates the Health Insurance Exchange Trust Fund. The trust fund will operate the exchange and will be funded by the government in the amount necessary to keep it working – less then money the trust fund will receive from people and companies who fail to meet the requirements of the health insurance mandates for coverage This includes the penalties paid by people who fail to get coverage (mandated coverage), employment taxes levied against companies who elect not to provide health coverage when they are obligated under this law to do so, and certain excise taxes levied against those who fail to meet certain health coverage requirements. While these taxes and penalties will be collected by the IRS, it will be turned over to the trust in order to reduce the amount the federal treasury has to give the health exchange to operate.

Sec. 308, page 197

This one is kind of interesting. A state, or a group of states operating together, may apply to the commissioner for permission to operate their own health insurance exchange. If permission is granted, the states will not be obligated to participate in the federal exchange program. This speaks to states who desire to do their own thing instead of being obligated to the federal government.

Sec. 309, page 204

This one throws a bone to the GOP. Beginning in 2015, 2 or more States can get together to form ‘Health Care Choice Compacts’ to facilitate individuals to buy health insurance across state lines. To help them along, the federal government will make grants available to states that would like to do this.

Sec. 310, page 206

This section is the CO-OP plan option we’ve heard so much about. Six months after this law passes, the Commissioner will make money available through grants and loans to non-profit, member owned and operated co-ops to help establish and operate the programs, so long as the co-ops are offered through the health exchange. The bill provides $5 billion dollars to do this.

Next up – Creation of the public option.