Feds Outline Framework for State-Based Insurance Exchanges



WASHINGTON – States seeking to establish health care insurance exchanges may partner with the federal government, or choose not to, according to rules that set minimum standards for building the exchanges issued by the U.S. Department of Health and Human Services at a July 11 press conference.

Additionally, the newly proposed rules establish a program for small businesses to offer insurance options to their employees.

Photo credit: Frances Correa/Elsevier Global Medical News

HHS Secretary Kathleen Sebelius (left) and Terry Gardiner, national policy director for Small Business Majority, spoke at a press conference announcing the framework for state-based insurance exchanges.

Forty-nine states, the District of Columbia, and four territories have accepted grants to help plan and operate the exchanges, according to a statement by HHS. More than "half of all states are taking additional action beyond receiving a planning grant such as passing legislation or taking administrative action to begin building exchanges. States will continue to implement exchanges on different schedules through 2014."

Oklahoma currently is the only state that has rejected the $1 million federal grant offered to states to implement an exchange.

The release of these guidelines is a step forward in promoting a competitive insurance market, HHS Secretary Kathleen Sebelius said at the press conference. Small businesses in particular are at a disadvantage if they are paying substantially more than larger companies for exactly the same coverage.

The high cost of health care is the number one issue for small businesses, agreed Terry Gardiner, national policy director for Small Business Majority. According to Mr. Gardiner, without government intervention, small businesses would suffer a loss of 178,000 jobs, $834 billion in reduced wages for employees, and $2.4 trillion in health care costs over the next 10 years. These numbers are based on a study that Small Business Majority commissioned from Nelson (New Zealand) Marlborough Institute of Technology, he said.

If states don’t have a comprehensive health exchange plan in place by the January 2014 deadline, the federal government will step in with their own plan. However, states will have the option to establish their own exchange in the future if they provide a 12-month notice to HHS, along with a comprehensive plan for implementation and testing, according to Steve Larsen, director of the Center for Consumer Information and Insurance Oversight at the Centers for Medicare and Medicaid Services. If states have some, but not all, requirements in place by the deadline, they could be granted a "conditional" approval on the basis that they have an adequate implementation plan in place.

HHS will evaluate state exchanges based on their ability to fully serve consumers by providing one-stop shopping, a choice of plans, and affordable coverage, said Joel Ario, head of the insurance exchange bureau at HHS. Each state’s capabilities in information technology will also be assessed.

Over the next year, HHS will release further guidelines regarding essential health benefits as well as quality improvement and eligibility enrollment standards. HHS will continue to accept comments on the proposed rules over the next 75 days.

To listen to the full press conference, click on the audio player below.

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