With all of the attention focused on the upcoming oral arguments in the United States Supreme Court on the individual mandate, it is easy to forget that there are many other pending components to national healthcare reform. One of the most interesting of these components, and also the most state-specific, concerns the proposal for a series of state health insurance exchanges. Alabama has been quite active in this arena over the past six months.
Under ObamaCare or the Patient Protection and Affordable Care Act, every state must have a health insurance exchange in place by 2014 as a mechanism to allow individuals and small businesses to buy coverage and receive federal subsidies if they are eligible. Each state must either establish its own Health Insurance Exchange or be forced into a national “one size fits all” federal exchange. Health Insurance Exchanges are supposed to provide an online market place to allow small businesses and individuals to evaluate health insurance options and apply for coverage from competing entities.
In June of last year, Gov. Bentley appointed the Alabama Health Insurance Exchange Study Commission. Chaired by Sen. Greg Reed and Rep. Jim McClendon, the Commission was composed of 15 representatives from the business and the healthcare community as well as key governmental officials. The Commission met five times from September through November and retained LMI, a national consultant on health policy and insurance exchanges out of McLean, Virginia, to guide it through its recommendations.
At the end of November of 2011, the Commission presented its recommendations for the Alabama Health Insurance Exchange to Governor Bentley. The Commission concluded that Alabama should establish its own exchange to be named the “Alabama Health Insurance Marketplace” which should serve to facilitate a free market approach to health insurance. Furthermore, it determined that the Alabama small business and individual risk pools should be separate and that the definition of “small employer” should be employers of between 2 and 50 employees until 2016. Importantly, the Commission recommended that the Alabama Exchange be funded by assessments on all health insurance products sold in the small group and individual markets in Alabama. The Commission also voted unanimously to recommend that Alabama establish a new quasi-public authority to oversee the Alabama Exchange.
According to the Commission’s report, the Alabama Exchange should do the following:
1. Determine eligibility for individual market subsidies, and coordinate with Medicaid and ALL Kids;
2. Certify qualified health plans;
3. Establish a call center and customer service unit;
4. Enable people to shop for insurance through multiple channels (i.e., web, phone, mail, walk-in);
5. Provide consumers with decision-support tools;
6. Develop premium rating engine and enrollment system;
7. Rate health plans based on cost and quality;
8. Establish and maintain an exchange web portal;
9. Coordinate premium billing, collection and remittance for the small employer exchange, and possibly the individual exchange;
10. Develop financial management and financial sustainability plan; and
11. Certify exemptions under the individual mandate and report information to federal agencies.
The Alabama Department of Insurance has received an $8.6 million grant from the Department of Health and Human Services to “support core staff, contracts, and activities around early implementation of the Alabama Health Insurance Exchange.” Working through the Alabama Health Insurance Exchange Study Commission, this award is supposed to support the day-to-day establishment of key exchange components such as the website, Alabama call center, and coordination with Alabama’s existing public health insurance programs such as Medicaid and the Children’s Health Insurance Program.
In order to implement the Health Insurance Marketplace, Alabama will need to adopt legislation adopting or revising these recommendations and authorizing the creation of the exchange. Gov. Bentley has been recently quoted as saying that the exchange plan under consideration in Alabama is currently too complicated and may not work. He has expressed concern that too few insurance companies would participate in the exchange and that costs for the programs offered would be too high. Without enabling legislation soon, it may be impossible to have a fully functioning exchange by the 2014 deadline.
Assuming the Alabama legislature passes final legislation for the Alabama Health Insurance Marketplace, Alabama must determine if it wants to apply for an “innovation waiver” under the proposed rule issued by the Department of Health and Human Services on February 22 and pursue an even more customized approach. These waivers increase the flexibility and allow states to pursue more tailor-made innovative strategies with their health insurance exchanges. Using the innovation waivers, Alabama could change benefit levels or add new benefit levels for plans offered in the exchanges.
Clearly, Alabama has been active in the Health Exchange arena. If ObamaCare continues in place, these efforts have the potential to transform the purchase of health insurance for many Alabamians. Because of the overarching implications for providers and employers alike, both groups should be carefully monitoring future developments in this key area.
Colin Luke is a partner in the health law practice of Bradley Arant Boult Cummings.