Wednesday, June 5, 2013



Another lesson in the Affordable Care Act:

Our series today discusses Health Benefit Exchanges, also known as Health Information Exchanges.  (HBX HIX) twitter #hix #hbx

curated from HealthCare IT News

The GAO has concluded that the states across the country setting up health insurance exchanges will be ready for enrollment by the Oct. 1, 2013 deadline. Coverage is set to begin Jan. 1, 2014.

The Patient Protection and Affordable Care Act and the Department of Health and Human Services regulations and guidance require states and exchanges to carry out a number of key functions, for which state responsibilities vary by exchange type.

States can choose to establish and operate an exchange or give the authority to HHS to establish and run  the exchange. States may also choose to enter into a partnership with HHS whereby HHS establishes the exchange and the state assists with operating various functions. Exchanges are online marketplaces – websites – where eligible individuals and small business employers can compare and select health insurance coverage from participating health plans.

According to HHS, 18 states will establish a state-based exchange, while 26 will have a federally facilitated exchange. Seven states will partner with HHS.

A state that chooses to operate its exchange is responsible for:

  • Establishing an operating and governance structure
  • Ensuring exchanges are capable of certifying qualified health plans and making them available to qualified individuals
  • Developing electronic, streamlined, and coordinated eligibility and enrollment systems
  • Conducting consumer outreach and assistance
  • Ensuring the financial sustainability of the exchange
  • A state that partners with HHS may assist HHS with certain functions, such as making qualified health plan recommendations and conducting aspects of consumer outreach and assistance
  • Despite some challenges, the seven selected states in GAO's review reported they have taken actions to create exchanges, which they expect will be ready for enrollment by the deadline

Clearly 2/3rds of the states do not wish to be involved in setting up or running a HBX. There has been much discussion in recent months about  Governors reticence to have mandates by the federal government that will cost states money.

The role of expanding Medi-caid to accommodate several million uninsured places a new strain on state budgets. Although the federal government has agreed to subsidize this expansion for several years it is very unclear what will happen after the initial two years.

Some quarters remain optimistic about the success of introducing the Patient Affordable Care Act. However, there are many uncertainties about the long term eventualities as the program roles out over the next several years.  Each step depends upon success of a prior step.  The domino effect has the potential to go either way.  Hope is a poor guarantee for success.

Financing HIX is no small ticket and HIX are using a variety of methods to recoup expenses:  State health insurance exchanges are putting together financing and revenue sources, with many likely relying on insurer fees, as long-term state or federal support remains uncertain.

State health insurance exchanges are putting together financing and revenue sources, with many likely relying on insurer fees, as long-term state or federal support remains uncertain.

Fees and Premium Support:

State by State:

Colorado HIX

The Colorado exchange, is estimated to need up to $24 million annually for its operations. The exchange was awarded two federal grants totaling about $60 million, only about $15 million of which was spent as of December 2012.

The Colorado Health Benefit Exchange is aiming to create multiple revenue streams, with the board approving a 1.4 percent premium fee and now urging lawmakers to pass legislation permitting a $1.80 per member monthly fee for up to three years.

Connecticut HIX

Called Access Health CT, has been keen to note on its website that it will not be funded with state dollars (something Covered California stresses as well). The HIX is running on federal funds through 2014, and it’s likely going to have a premium fee of up to 2.8 percent.

With an estimated 360,000 uninsured residents in Connecticut, Access Health CT is going to be on the smaller side in its membership. Even so, implementation — or the pace of it, combined with the backdrop to state budget realities in Connecticut — has been such that Access Health CEO Kevin Counihan, the former chief market officer at the Massachusetts Health Insurance Connector Authority, has told the federal government the staff won’t be implementing any new federal regulations after March, until they’re sure the user interfaces are ready to work, which they’re testing in June.

The New York Health Benefit Exchange,

has received about $370 million in federal funding and will be enrolling an estimated 1 million individuals and small business employees.

Created as a program of the Department of Health, with five regional advisory committees, the exchange is being built with federal funds and is required to be self-sustaining by 2015.

In Minnesota,

Democrats in the house and senate disagreed over whether the exchange, now called MNsure, should be funded by premium fees or from the state’s tobacco sales tax fund, which critics of that idea said basically meant the state general fund. In the reconciled bill the Minnesota governor signed into law in March, MNsure will be financed by a premium fee of up to 3.5 percent, along with the remaining dollars from about $110 million in federal grants.

The Silver State Health Insurance Exchange in Nevada

recently finalized long-term financing plans with a $8.04 per member monthly fee on health plans. In its annual report, Nevada exchange officials expect that insurers will likely build the fee into premiums and that “the fee will generally be paid by the advance premium tax credit for individuals” with incomes between 100 percent and 400 percent of the federal poverty level.

premium tax credit for individuals” with incomes between 100 percent and 400 percent of the federal poverty level.

In Kentucky,

a traditionally conservative state with a Democratic governor and majority legislature, the Kentucky Health Benefit Exchange is still considering financing mechanisms (with tobacco settlement funds being floated as one source), and like other HIXs it has to be self-sustaining by 2015. Housed at the Cabinet for Health and Family Services, the exchange is permitted by the state to place a premium fee of 1 percent on health plans, but has not made any final decisions.

Exchange executive director a long-time state employees who’s worked in the insurance and Medicaid departments, told the Associated Press that the 1 percent fee would probably generate about $26 million annually, which may or may not be enough to sustain operations. The exchange has received about $252 million in federal grants, and so far spent about $35 million on staffing and IT.


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