The race is on to develop a health insurance exchange

The Wyoming Health Insurance Benefits Exchange Steering Committee has taken on the daunting task of dissecting, analyzing and trying to figure out a way to set up a state run health insurance benefit exchange or “buying program” in keeping with the new federal health insurance requirements.

The trick is to develop a program that will work in a rural state like Wyoming, with a population that is less than most major cities in the country. The state of Wyoming has a population of 558,000 people compared to New York City, which has a population of more than 8 million people. To compound matters, the committee is working under the pressure of a deadline to come up with a plan by January of 2013 or the federal government will impose its own plan on the state. To that end, many states, including Wyoming, are taking advantage of federal grants to help “figure it out” in time to meet the federally mandated deadline.

Under the new federal insurance rules passed into law recently under the Obama administration, every citizen must have health insurance and every employer must offer health insurance to its employees by the year 2014 or receive a penalty by the federal government. Persons under a certain income level will automatically receive insurance through the federal government in the form of Medicaid. The idea is to have every person in the country insured by the year 2014. They would be insured either through their own policy, a policy provided by their employer or by the federal government.

The steering committee for the state of Wyoming consists of two senators, two representatives, someone from the governor’s office, the Department of Health, a major insurance company, an insurance agent, a consumer, a small business owner, a large business owner, a chief financial officer of a major hospital and the insurance commissioner.

Elaine Harvey

Big Horn County Rep. Elaine Harvey co-chairs the committee. “The committee consists of stakeholders or people who will be impacted by this (new health insurance law),” explained Harvey.

The committee also hired the consulting group PCG (Public Consulting Group) to help with their research regarding how to set up an insurance benefit exchange plan that will work for the state of Wyoming.

“I’m not comfortable with the health care law at all,” said Harvey. “It was not well thought through and it did not take into consideration rural states and frontier states and the effect it will have on citizens and on the budget for the state. If you took one piece of it that I could live with, it would be the exchanges, but only if we can run private exchanges.”

The insurance exchange can be handled in one of two ways, according to Harvey. Either the federal government becomes the insurer like in the state of Massachusetts where the system is a single payer system, with the government being the payer, or the state coordinates the program in the form of a private exchange like in Utah, where a number of private insurance companies act as the payers. Harvey and her fellow committee members are trying to set up a private exchange for Wyoming that will be sound financially for the state and will create competition among insurance companies and, it is hoped, lower insurance rates in the process.

“An exchange is an organized way to buy health insurance,” explained Harvey. “The question is do we have enough people in the state of Wyoming who will participate in the exchange to make an actuarially sound insurance pool, because if you have too few people, one single event can blow the whole pool.”

Different levels of coverage will be offered in the exchange. The term being thrown around by lawmakers is “metal plans” with bronze, silver, gold and platinum levels of coverage. The rates will be higher for so-called “platinum plans” because they will include more benefits with lower deductibles, than for “bronze” plans with higher deductibles and fewer perks, like full prescription coverage.

The exchange is designed to simplify how the plans are presented to individuals or businesses who are shopping for coverage so they can compare “apples to apples” when examining the benefits and rates for the plans and make informed decisions about which plan is best for their budget and needs.

The committee must come up with a plan and submit the plan to the federal government by Jan. 1, 2013, or the federal government will impose its own plan on the state. The law requires that the exchange be fully operational with everyone in the entire country insured by the Jan. 1, 2014, deadline. This means an enrollment period for the plans must be in place by the end of the year 2013, so that participants have time to analyze the plans and sign up.

Harvey has a number of objections to a federal government imposed plan. She doesn’t like the idea that citizens will be required to input personal information into a national computer system in order to enroll in the plan that the IRS and Homeland Security departments will also have access to.

She is concerned that the federal subsidy program, as it is currently written, is not clearly defined and that the federal government may not be able to sustain it because it creates the possibility that the states could get saddled the burden of subsidizing large numbers of individuals who are automatically put on Medicaid because of their income level.

She is also worried that in some parts of the state, there are no providers who will accept Medicaid patients because it doesn’t pay enough to cover their costs. In effect, that creates a situation where people are insured but have no providers available where they can use their insurance.

She also doesn’t like the idea that people will be forced to receive public assistance when they may not want that assistance.

“What about people who are fiercely proud and just don’t want to be on the dole, like some farmers and ranchers in our area, who may qualify for Medicaid, but if their kid breaks a leg they take him to the ER and then they sell a cow or some other commodity they have to pay the bill,” she said. “It should be their choice, not the government’s choice.”

Harvey is also concerned that a government defined benefit package might include so many required products or “mandates” that it will actually raise insurance rates instead of lowering them. An analysis by the consulting firm PCG confirmed this, estimating that rates could increase as much as 30 to 40 percent if too many mandates are required in the plans.

“Wyoming is currently a low mandate state; we don’t force insurers to provide a lot of mandates and we’re worried that the federal program will look more like California, which has over 400 mandates,” said Harvey. “That means that insurance providers might be required to include a lot of extras that will bring the rates up.”

She also expressed concern that certain large companies like Walmart and McDonald’s have already been exempted from the federal government’s essential benefit package and won’t have to provide their employees with the same package that other businesses will be required to provide.

According to Harvey, 20 states are going to accept the federal exchange, while others (including Wyoming) are racing against the clock to set up their own private exchange hoping to avoid some of the pitfalls of the federally run program.

“Our governor has mandated us to look for a Wyoming solution whether it is federally compliant or not,” explained Harvey. “We need something that works for Wyoming, that insures Wyoming people, and the organized market of an insurance exchange is a good idea. It is all the federal mandates that we are pushing back against and we’re not the only ones. The majority of states are pushing back.”

By Patti Carpenter