Insurers, Some States and Co-op Plans Moving Forward with Obamacare

Econintersect: More than half the states say they can’t figure “it” out. But that does not appear to be the case with co-op plans in a number of states and with insurance companies. “It” is the PPACA (Patient Protection and Affordable Care Act of 2012 – aka Obamacare). As summarized in a GEI News story yesterday (03 October 2012), 26 states are not taking actions required by the law to implement Obamacare by October of next year. A common complaint from those states is that they “have not had their questions answered by Washington” or have received “inadequate guidance on what is required under the law.”

Some states (24 in number), insurance companies and co-op plans do not appear to have the “insurmountable barriers” that the 26 states not moving forward have encountered. The 26 states that have not been able to take action on how to implement insurance exchanges are shown in gray on the following map from the NCSL (National Conference of State Legislatures), updated as of 02m October 2012:

States that have elected not to create a state-based exchange will default to a federally-based exchange. That will apparently be the outcome for any of the 26 gray states that do not take action and establish their own exchange by October 2013.

The Cato Institute has raised a question about the wording of PPACA which they say prohibits the tax benefits and tax implementation features of the law that are incumbent upon those in state exchanges for participants in the federal exchange.

Timothy Jost at Health Affairs Blog has argued that the Cato Institute position is a “cut off my nose to spite my face” (an Econintersect interpretation, not Jost’s words) maneuver:

“… it may very well convince conservative state legislators and governors to refuse to establish health insurance exchanges in their states. This would in turn lead to the establishment of federally facilitated exchanges in states that decide not to establish their own exchanges. Thus, ironically, we see the spectacle of ACA opponents fighting for increased taxes on the middle class and for a greater federal government “takeover” of health insurance markets.“

Editor’s note: Because the federal exchange will exist only by (1) election of a state or (2) default for a state that does not comply with law requiring a decision to be made, a legal argument may be made that the federal exchange exists only as a proxy for the several state exchanges and all provisions applicable for state exchanges therefore apply to the proxy.

In spite of the reluctance of more than half the states take action on PPACA required insurance exchanges, there is action occurring outside of state governments. This is true even in states that are not (or have not yet taken action) to establish state-based exchanges.

One area is the establishment of health insurance co-operatives, authorized under PPACA. California has a new law that establishes the state regulation of member-owned health insurance plans. Other states have seen actions toward the establishment of such co-ops include Washington, Maryland and Louisiana. According to Life Health Pro, the Dept. of Health and Human Services (HHS) has to date awarded loans to 22 co-op organizers.

Insurance companies are pressing ahead to be able to fully implement Obamacare after having been slow to take action pending the outcome of the Supreme Court decision on the law. As a result many insurance companies have not completed publishing the Summary of Benefits and Coverage statements for their plans as required by PPACA, but are planning on being compliant by October 2013, according to Chris McMahon in Insurance Networking News. These documents will be available online for consumer review of coverages offered.

House Republicans have been seeking to place the blame for the delays on the administration, according to a 13 September article by Allison Bell at Life Health Pro. They have also received testimony that questions whether the federal exchange (multi-state plan) would place individual state-based exchanges at a disadvantage. From that article, discussing testimony by Michael Consedine, Republican Insurance Commissioner for Pennsylvania:

While talking generally about areas of confusion, he raised questions about what could be a huge new PPACA-related program — the multi-state plan (MSP) program — and whether MSPs could end up having an unfair edge over traditional single-state plans.
If HHS runs a state’s exchange program “will the multi-state insurance plans be required to adhere to all applicable Pennsylvania insurance laws?” Pennsylvania asks in an appendix included with a written version of his remarks posted on the Ways and Means website.

While all this is going on, at least one private company is moving forward to provide private exchanges that compete with the public ones. Liazon Corp. organizes insurance exchanges for businesses to cost-effectively manage their employee plans. The company currently has over 2,000 clients ranging from sole proprietors to companies of 3,500 employees as well as business associations and Chambers of Commerce. One curious connection to the presidential race: One of the venture capital firms invested in Liazon is Bain Capital, Mitt Romney’s old firm.

Other interesting reading on healthcare: