HHS offers states more flexibility to set up health insurance exchanges
Final rules announced by the Department of Health and Human Services will give states more flexibility to establish health insurance exchanges required under the Affordable Care Act.
“These policies give states the flexibility the need to design an exchange that works for them,” said HHS Secretary Kathleen Sebelius. “These new marketplaces will offer Americans one-stop shopping for health insurance, where insurers will compete for your business. More competition will drive down costs and exchanges will give individuals and small businesses the same purchasing power big businesses have today.”
The final health exchange policies were announced two weeks before the Supreme Court will hear oral arguments on lawsuits seeking to repeal the Affordable Care Act of 2009, which requires mandatory health insurance coverage for all Americans by 2014.
Last week, the Los Angeles Times reported that Mary Brown of Florida – one of the lead plaintiffs opposing the insurance mandate – was forced to declare bankruptcy after racking up $4,500 in unpaid medical bills. Brown’s bankruptcy reinforces the government’s argument that mandatory coverage is necessary because millions of uninsured Americans use “health services for which they do not pay,” forcing taxpayers and those with health insurance to pick up billions in added costs.
To help individuals and small businesses afford the mandatory coverage, the Affordable Care Act requires all states to set up an exchange where consumers can easily compare and sign up for private or public insurance plans. In theory, the health exchange is supposed to help lower insurance costs by creating a competitive marketplace for health insurers seeking new customers.
Today’s HHS announcement sets the minimum standards for state insurance exchanges, qualifying health plans, and eligible individuals and businesses:
State & Regional Exchanges:
Under the new rules, states will have the flexibility to set up the mandatory health exchanges in a variety of ways:
- as part of an existing state agency
- as a new independent public agency
- as a non-profit organization
- or partner with other states to create a regional exchange
States that are not ready to operate a functioning exchange by 2014 may request an extension from HHS.
Qualifying Health Plans:
All health plans participating in the public exchange must meet minimum health coverage standards – including preventive care – set by the Affordable Care Act and may not discriminate against people with pre-existing illnesses. The new HHS policies will also allow exchanges to work with private insurers to structure health plan choices that better meet the needs of consumers in a specific state or region. State exchanges will also have the authority to set marketing standards to prevent discrimination against people with pre-existing conditions.
Eligibility & Enrollment:
The insurance exchanges must use a streamlined web system to reduce paperwork for consumers, lower administrative costs, and improve coordination with Medicaid, CHIP, and other public insurance programs. The state exchanges will serve as the one-stop shop for individuals and businesses to compare and sign up for health plans, determine their eligibility, and update any changes – such as marriage, divorce, and new job – that may impact their eligibility.
Small Business Health Options Program (SHOP):
Under the SHOP exchange, small businesses – with less than 50 employees – can offer their employees health coverage from different insurance companies while paying only one bill. States can extend the SHOP benefits to businesses with less than 100 employees after 2016. Finally, small businesses with less than 25 employees may receive a tax credit of up to 50% of their premium payments for health plans purchased through SHOP.
- Department of Health and Human Services: Final rules on Affordable Health Insurance Exchanges (March 12, 2012)Department of Health and Human Services: Policies give states more flexibility to establish Affordable Insurance Exchanges
- Department of Health and Human Services: Fact sheet on affordable insurance exchanges
- SupremeCourt.gov: United States Department of Health and Human Services v. State of Florida reply brief submitted October 2011 (PDF)