By David Blatt, Director of Oklahoma Policy Institute
In the new national health care law (the Affordable Care
Act, or ACA), exchanges are state-level competitive marketplaces for
individuals and small businesses to purchase insurance. After winning a $54
million Early Innovator grant earlier this year, Oklahoma was poised to become
a national leader with a high-quality, consumer-oriented health insurance
exchange. In a state that ranks 46th in overall citizen health and where almost
one in six residents are without health insurance, the decisions our leaders make
regarding the exchange are critical to our efforts to expand coverage and
improve our state’s health care infrastructure.
Governor Mary Fallin and legislative leaders’ recent
decision to reverse course by rejecting the federal grant and relying instead
on state and private money to build an “Oklahoma Health Insurance Private
Enterprise Network” is a symbolic victory for the most vocal opponents of
health reform. Unfortunately, this
puts unnecessary strains on the state budget and sends Oklahoma on a collision
course with federal law. More importantly, it is likely to deprive Oklahomans
of access to a strong, well-regulated, consumer-friendly marketplace to
purchase private insurance coverage and will do nothing to actually make health
insurance more affordable for Oklahomans.
One of the most
important provisions of the Affordable Care Act is the requirement that states
establish private insurance marketplaces, or ‘exchanges’, to sell plans to
individuals and small groups in their state beginning January 1, 2014. States
have some flexibility in setting up their exchanges, but all exchanges must
meet certain minimum requirements set out in Section 131 of the ACA. In
particular, the online exchanges must:
- Certify that plans sold in the exchange meet quality
standards. Qualified health plans must offer essential benefits and meet
regulatory standards for provider networks, quality improvement, accreditation
and more. - Review rate and premium increases. Exchanges will review
and approve premium increases and mandate that insurance companies spend most
consumer premium dollars directly on medical care, not overhead or
administration. - Enroll individuals and businesses in a user-friendly way.
The exchange must allow consumers to view, compare, and purchase coverage
online. Exchanges must also
determine an applicant’s eligibility for tax credits that subsidize the cost of
coverage, as well as determine eligibility and enroll individuals in Medicaid
and other public programs. - Provide consumer-friendly features like a toll-free
hotline, an online cost-of-coverage calculator, access to “navigators” to
assist with enrollment, and more.
In other words, the exchange envisioned by the Affordable
Care Act is not just a website that enables plan and premium comparisons –
consumers can do that now through existing websites and search engines. It is a
full-fledged health insurance marketplace where private insurance will be sold
and regulated with robust consumer protections.
Oklahoma is well-positioned to implement this kind of
strong exchange. For example, the Insure Oklahoma program is a partnership that
provides public subsidies to small businesses and their employees for the
purchase of private insurance. The Oklahoma Health Care Authority already
operates an online system to determine eligibility and enroll applicants in
Medicaid and other health benefit programs. The state also operates the
Oklahoma Health Information Exchange to expand the use of health information
technology to promote better
health care. This existing infrastructure is what led Oklahoma to receive the
Early Innovator Grant, which in turn provided the opportunity for Oklahoma to
construct an integrated, technologically-sophisticated exchange.
Is there any chance that Oklahoma will develop a strong
exchange after rejecting the federal grant? The answer is almost certainly
“no,” for both fiscal and political reasons. Without federal dollars, Oklahoma
lacks the resources to build a strong, effective exchange. Speaking to a
meeting of health insurance underwriters in March in defense of her decision to
accept the $54 million, Governor Fallin was asked about the feasibility of
rejecting the federal grant and generating state money for an exchange. After
noting that all state agencies have taken cuts over the past two years and that
the state faces a $500 million budget shortfall for the year ahead, the
Governor replied:
“So things have been pretty tight. I’m all about
tightening our belts and creating more efficiency and effectiveness but there
are some of our state programs that are kind of getting to the bare bones. So
do we have the state money for the exchange? No we don’t.”
This is what led the Oklahoman to conclude that in
rejecting the federal grant, “ideology trumped common sense.”
Yet even if the money to support an exchange were to
materialize, the state’s political leaders have signaled their intent to resist
developing an exchange that conforms to the requirements of the Affordable Care
Act. Last week, legislation to
implement the ‘Oklahoma Health Insurance Private Enterprise Network’, SB 971, was introduced in the Senate.
Apparently responding to pressure from insurance companies, agents and
underwriters, the state’s “non-exchange” would be little more than a search
engine for information and referrals.
The network set out in SB 971 falls well short of meeting
even the most basic standards set out in the Affordable Care Act in several
respects. The network would be
expressly precluded from exercising regulatory authority, even though federal
guidance has specified “regulatory standards in five areas that insurers must
meet in order to be certified as qualified health plans by an Exchange.” SB 971
seems to require the network to accept all health plans, even those that fail
to meet the essential health benefits package or quality standards that the ACA
deems necessary in order to participate in the exchange. The network seems
unlikely to be able to assume core exchange functions, such as determining
applicants’ eligibility for subsidies or public health insurance coverage,
directly enrolling individuals and small businesses in coverage, or
coordinating eligibility and enrollment between multiple programs. It also
creates a governing entity which excludes the Medicaid agency and in which two
of the seven seats are reserved for the insurance industry but only one for a
consumer: it’s not hard to predict whose interests would be best represented.
These deficiencies raise the specter of the federal
government stepping in to create a real health insurance exchange in Oklahoma –
precisely the threat that spurred Gov. Fallin to accept the $54 million federal
grant in the first place. It is still possible that the network could
eventually meet federal standards. But for now, it looks as if Oklahoma is more
intent on proving its defiance of Washington and responding to interests and
fears of the insurance industry than it is in creating an insurance marketplace
that would actually benefit everyday Oklahomans.