State Moves Forward in Exploration of Establishing a Health Insurance Exchange
Long before the United States Supreme Court upheld the Affordable Care Act (ACA) in late June, the state of Tennessee had begun the groundwork to establish a Health Insurance Exchange for its citizens … or not.
“There is no definite answer yet as to whether or not Tennessee will have its own healthcare exchange or whether it will use the federal one,” explained Kelly Gunderson, director of Communications for the state’s Division of Health Care Finance and Administration. She added, “The whole idea of exchanges could change as a result of the upcoming election. We want to be prepared should states be required to have an exchange and should Tennessee choose to run its own … but in the interim, we don’t want to take any action we can’t back away from.”
Tennessee has already received four federal grants totaling more than more than $9 million to assist in the evaluation and building process, including one planning grant and three level one establishment grants.
A million dollar planning grant was awarded to Tennessee on Sept. 30, 2010 to help the state fund an analysis of resources and capabilities, create policy briefs, undertake legal analyses and conduct contractor studies. Two subsequent establishment grants were awarded in the last half of 2011, and a $4.3 million establishment grant was given out this spring.
According to the Department of Health and Human Services’ site outlining state plans for the grant funding, Tennessee is using the establishment grants to begin developing preliminary business requirements and requests for proposals for critical information technology and operational functions necessary for implementation. The state has also published a policy paper and continues to consult with stakeholders about the pros and cons of operating a state insurance exchange.
Other establishment grant funds were requested to support staffing needs, ongoing review and analyses of the federal rules and guidance, marketing and outreach efforts, research, and other administrative expenses. According to the HHS site, the most recent funding has been earmarked to build upon current efforts and to support “Small Business Health Options Program system infrastructure, reinsurance and risk adjustment administration, and Qualified Health Plan contract actuaries.”
Who the Exchanges Serve
“It’s basically a marketplace for individuals to buy health insurance,” said Gunderson. “The way it’s set up today, the federal government would provide subsidies for certain income levels, and then the individual could go to the insurance exchange either the state set up or federal government set up to purchase insurance.”
Subsidies to purchase private health insurance will be available for those from 100-400 percent of the federal poverty level. However, Gunderson noted, anyone of any income level could buy insurance on the open market through the exchanges. Employers could also use the exchanges to purchase health insurance for employees.
The idea behind an exchange is similar to that of major corporations where a large pool is created to share risk. As Gunderson pointed out, some of the new changes within ACA that expands coverage could result in lower rates for sicker individuals and those with chronic conditions, but also could cost younger, healthier individuals more than they currently pay for coverage.
She added there would be a range of commercial options available to consumers with higher coverage tiers offering more bells and whistles than the lowest, most basic plan.
Tennessee White Paper
On Oct. 21, 2011, the state released a white paper on stakeholder input with a summary of feedback and insights gathered across Tennessee. An 11-page executive summary is available at: www.tn.gov/nationalhealthreform/forms/executivesummary.pdf
For more information on the entire Health Insurance Exchange process in Tennessee, please go online to: www.tn.gov/nationalhealthreform/exchange.shtml
“The state is like an administrator of this marketplace where commercial insurers come to offer their product, and the state also puts together the platform by which consumers navigate it,” Gunderson explained.
With the mandate that exchanges be fully operational on Jan. 1, 2014, states are quickly approaching crunch time to decide whether or not they will run their own exchange or rely on a federally-facilitated exchange (FFE).
“Right now the states are scheduled to declare their intent to the federal government on Nov. 16,” said Gunderson, noting the deadline falls just 10 days after this year’s presidential election.
At that time, states that decide to operate their own exchange are expected to submit a blueprint for how that exchange would work. On Jan. 1, 2013 … one year out from the exchanges going live … HHS will certify a state’s exchange as fully or conditionally operational. If the blueprint is not approved, an FFE will be implemented in that state.
While no final decision has been made in Tennessee, state officials have been busy gathering input from stakeholders. “Pretty much unanimously we heard from the stakeholders that it makes more sense for the state to run its own,” she said, adding that a state-run exchange allows Tennessee to retain more control over the program.
Currently, governors of a dozen states have committed to creating their own exchanges, while officials in Louisiana and Arkansas have declared they will not pursue a state-run exchange. About a dozen states have had little or no activity in preparing for an exchange, and the balance of the nation, like Tennessee, is actively studying options and implementation measures.
“That’s been the intent all along with the extensive planning and research … to be sure we would be prepared should we decide to move forward,” Gunderson concluded.
With the clock ticking, that decision will come sooner rather than later.
A Rose by Any Other Name
When is an HIE Not an HIE
It was bound to happen in the acronym-happy world of healthcare. Sooner or later, two national initiatives were destined to share the same initials and spark confusion from coast-to-coast.
And indeed, there was a fair amount of mix-up when the Health Insurance Exchange concept rolled out. It didn’t take long to realize the ‘go to’ acronym of HIE was already well established as a reference to the Health Information Exchange program.
Kelly Gunderson, director of Communications for Tennessee’s Division of Health Care Finance and Administration, said, “Early on HIE was used, but quickly the confusion was noted so we always just refer to it (insurance initiative) as ‘exchanges’ or ‘the exchange.’ If you see HIE, it should be the Health Information Exchange … but double check.”
Another option emerging as a possible shorthand for the insurance exchanges is HIX (for x-change). However, a Google search for “HIE, Insurance” still nets 2.5 million results pertaining to the insurance exchanges as compared to only 1.46 million hits for “HIX, Health.” Adding to the confusion, 389,000 results pop up for “HIX, Insurance,” but a significant number of those hits actually correlate to specific insurance companies in Colorado and The Carolinas.