In the new national health care law (the Affordable Care Act, or ACA), exchanges are state-level competitive marketplaces for individuals and small businesses to purchase insurance. After winning a $54 million Early Innovator grant earlier this year, Oklahoma was poised to become a national leader with a high-quality, consumer-oriented health insurance exchange. In a state that ranks 46th in overall citizen health and where almost one in six residents are without health insurance, the decisions our leaders make regarding the exchange are critical to our efforts to expand coverage and improve our state’s health care infrastructure.
Governor Mary Fallin and legislative leaders’ recent decision to reverse course by rejecting the federal grant and relying instead on state and private money to build an “Oklahoma Health Insurance Private Enterprise Network” is a symbolic victory for the most vocal opponents of health reform. Unfortunately, this puts unnecessary strains on the state budget and sends Oklahoma on a collision course with federal law. More importantly, it is likely to deprive Oklahomans of access to a strong, well-regulated, consumer-friendly marketplace to purchase private insurance coverage and will do nothing to actually make health insurance more affordable for Oklahomans.
As we discussed in this blog post, one of the most important provisions of the Affordable Care Act is the requirement that states establish private insurance marketplaces, or ‘exchanges’, to sell plans to individuals and small groups in their state beginning January 1, 2014. States have some flexibility in setting up their exchanges, but all exchanges must meet certain minimum requirements set out in Section 131 of the ACA. In particular, the online exchanges must:
- Certify that plans sold in the exchange meet quality standards. Qualified health plans must offer essential benefits and meet regulatory standards for provider networks, quality improvement, accreditation and more.
- Review rate and premium increases. Exchanges will review and approve premium increases and mandate that insurance companies spend most consumer premium dollars directly on medical care, not overhead or administration.
- Enroll individuals and businesses in a user-friendly way. The exchange must allow consumers to view, compare, and purchase coverage online. Exchanges must also determine an applicant’s eligibility for tax credits that subsidize the cost of coverage, as well as determine eligibility and enroll individuals in Medicaid and other public programs.
- Provide consumer-friendly features like a toll-free hotline, an online cost-of-coverage calculator, access to “navigators” to assist with enrollment, and more.
In other words, the exchange envisioned by the Affordable Care Act is not just a website that enables plan and premium comparisons – consumers can do that now through existing websites and search engines. It is a full-fledged health insurance marketplace where private insurance will be sold and regulated with robust consumer protections.
Oklahoma is well-positioned to implement this kind of strong exchange. For example, the Insure Oklahoma program is a partnership that provides public subsidies to small businesses and their employees for the purchase of private insurance. The Oklahoma Health Care Authority already operates an online system to determine eligibility and enroll applicants in Medicaid and other health benefit programs. The state also operates the Oklahoma Health Information Exchange to expand the use of health information technology to promote better health care. This existing infrastructure is what led Oklahoma to receive the Early Innovator Grant, which in turn provided the opportunity for Oklahoma to construct an integrated, technologically-sophisticated exchange.
Is there any chance that Oklahoma will develop a strong exchange after rejecting the federal grant? The answer is almost certainly “no,” for both fiscal and political reasons. Without federal dollars, Oklahoma lacks the resources to build a strong, effective exchange. Speaking to a meeting of health insurance underwriters in March in defense of her decision to accept the $54 million, Governor Fallin was asked about the feasibility of rejecting the federal grant and generating state money for an exchange. After noting that all state agencies have taken cuts over the past two years and that the state faces a $500 million budget shortfall for the year ahead, the Governor replied:
So things have been pretty tight. I’m all about tightening our belts and creating more efficiency and effectiveness but there are some of our state programs that are kind of getting to the bare bones. So do we have the state money for the exchange? No we don’t.
This is what led the Oklahoman to conclude that in rejecting the federal grant, “ideology trumped common sense.”
Yet even if the money to support an exchange were to materialize, the state’s political leaders have signaled their intent to resist developing an exchange that conforms to the requirements of the Affordable Care Act. Last week, legislation to implement the ‘Oklahoma Health Insurance Private Enterprise Network’, SB 971, was introduced in the Senate. Apparently responding to pressure from insurance companies, agents and underwriters, the state’s “non-exchange” would be little more than a search engine for information and referrals.
The network set out in SB 971 falls well short of meeting even the most basic standards set out in the Affordable Care Act in several respects. The network would be expressly precluded from exercising regulatory authority, even though federal guidance has specified “regulatory standards in five areas that insurers must meet in order to be certified as qualified health plans by an Exchange.” SB 971 seems to require the network to accept all health plans, even those that fail to meet the essential health benefits package or quality standards that the ACA deems necessary in order to participate in the exchange. The network seems unlikely to be able to assume core exchange functions, such as determining applicants’ eligibility for subsidies or public health insurance coverage, directly enrolling individuals and small businesses in coverage, or coordinating eligibility and enrollment between multiple programs. It also creates a governing entity which excludes the Medicaid agency and in which two of the seven seats are reserved for the insurance industry but only one for a consumer: it’s not hard to predict whose interests would be best represented.
These deficiencies raise the specter of the federal government stepping in to create a real health insurance exchange in Oklahoma – precisely the threat that spurred Gov. Fallin to accept the $54 million federal grant in the first place. It is still possible that the network could eventually meet federal standards. But for now, it looks as if Oklahoma is more intent on proving its defiance of Washington and responding to interests and fears of the insurance industry than it is in creating an insurance marketplace that would actually benefit everyday Oklahomans.
Update: For a final update on this bill, see Where Are They Now? Bills we kept our eye on