With open enrollment for millions of uninsured Americans less than 10 months away — Oct. 1, 2013 — the four GOP-led states are part of a larger group totaling 17 states plus Washington, D.C., that have gotten an initial go-ahead to build and run insurance exchanges.
Insurance exchanges are not a term that most consumers are currently familiar with. The new marketplaces are supposed to take the confusion and anxiety out of buying private health insurance for individuals and families who purchase their coverage directly.
Exchanges are meant to have the feel of an online travel site, an Expedia or Orbitz. But there’s one major difference: They will also offer some relief from sticker shock. Under President Barack Obama’s health care law, about 8 in 10 customers in the new marketplaces will be eligible for federal aid to help pay their premiums.
Small businesses will have separate access to their own exchanges.
The GOP-led states conditionally approved Thursday are Idaho, Nevada, New Mexico, and Utah. A fifth, Mississippi, may yet win approval, but the administration’s decision is complicated by a dispute between Republican state officials. The governor does not want to participate, while the insurance commissioner does.
The federal government will set up and run the new marketplaces in states that opt out of playing any role, and 19 Republican-led states have taken that route.
The rest are either pursuing partnerships with Washington or still mulling options. On Thursday, Arkansas got its initial approval to run a partnership, meaning the state will handle consumer issues and oversee health insurance plans while Washington handles the back-office tasks of enrolling consumers and verifying if they are eligible for subsidies. Delaware had earlier received approval for its partnership exchange.
“In ten months, consumers in all 50 states will have access to a new marketplace where they will be able to easily purchase affordable, high quality health insurance plans,” Health and Human Services Secretary Kathleen Sebelius said in a statement.
Right now, exchanges exist in only a couple of states, although some large private employers are also starting to experiment with them.
They were originally a Republican idea that won bipartisan support, only to be abandoned by many in the GOP once Obama incorporated the concept in his health care law.
The basic idea is that setting up a marketplace with clear-cut rules would benefit consumers and encourage insurance companies to compete, helping keep costs in check. Former Massachusetts Gov. Mitt Romney set up an exchange in that state under his 2006 health care overhaul law. And Utah has already launched one that caters to small businesses.
Under Obama’s law, plans in the new marketplaces will have to cover at least a basic set of benefits, including hospitalization, doctor visits, prescriptions, prevention and care for pregnant women and children. Cost to the consumer will be the main difference among plans, with four levels of coverage: bronze, silver, gold, and platinum. A consumer with a bronze plan will pay lower monthly premiums, but would face higher cost sharing for medical care.
Exchanges will also steer low-income people to state Medicaid programs. States have the option under the law of expanding Medicaid to cover more of their low-income residents, with the federal government picking up about 90 cents of every dollar in added costs.
Coverage through exchange plans will begin on Jan. 1, 2014.
At the same time, the law will require most Americans to carry health insurance, either through an employer, a government program, or by buying their own policy. Insurance companies will be barred from turning away the sick or charging them more. And insurers will also be limited in what they can charge older customers.