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Ohio and the Federally Facilitated Exchange –Not a Disaster for Ohio Consumers, But Not the Best We Can Hope For
On November 16, the Kasich administration released a letter they sent to the federal government stating that Ohio was declining to set up its own Health Exchange, but rather it would let the federal government operate Ohio’s Exchange.
The announcement came as no surprise to Ohio Exchange watchers, since the administration had been quite transparent about its intention to default to a federal exchange. Should consumers worry? And how does the administration’s decision fit in with its overall approach to governing and to health care transformation?
Are Ohioans Better Off with a State or Federal Exchange? Hard to Say
Reporters trying to understand the implications of the Exchange announcement asked whether Ohio consumers should be worried at the prospect of a federally facilitated Exchange (or FFE). The answer is No. In fact, given the open hostility of the Kasich administration to the consumer protections and the lack of stakeholder input into the administration’s decisions on the Exchange, Ohio consumers are probably better off with a federally operated Exchange.
And, consumers will get the same basic benefits from an FFE vs. a state-run Exchange.
As with a state run Exchange, the FFE will give people and small businesses seeking affordable health insurance a robust choice of health insurance plans. Each plan will have to be qualified, meaning that they offer the minimal “essential health benefits” – 10 benefits that must be in each plan. For more information on Essential health benefits, visit http://bit.ly/SdT8L5. With either a federal or state run Exchange, consumers who enroll will receive an income-based discount on premiums (in the form of a tax credit). People with incomes under 250% of the federal poverty level will also receive an additional tax credit to limit their cost sharing. Finally, the Exchange will be accessible by an easy-to-navigate website and will also have a navigation program, including insurance brokers and nonprofit organizations, to provide face-to-face education and assistance to people needing health coverage. So, consumers will still have access to affordable insurance choices with the FFE.
But, a robust, state-run Exchange could do more than the minimum to provide consumers and small businesses with the best value in health coverage. And Ohio’s reluctance to do so is mildly irksome, given the Kasich administration’s transformational work.
Could Ohio Do Better With a State-Operated Exchange? Possibly
But, the administration’s decision does seem to contradict other administration policies. A well-run state Exchange could use the new competitive marketplace to drive up health care value and lower health care costs – the stated goal of the Governor’s Office of Health Transformation (OHT). The ACA requires that all insurance sold through either a state or federal exchange must meet certain requirements. However, states may, in certifying “qualified health plans,” add additional quality standards to the minimum. For Ohio, this would mean incorporating standards Ohio Medicaid is already imposing on Medicaid managed care plans to promote health care transformation. As the independent NCQA (the National Committee for Quality Assurance), which rates health care, wrote:
Exchanges also have great potential to realign market forces if states build their Exchanges to promote competition among plans based on value, not just on premiums. Value means more than low premiums, which may reflect low quality or high cost-sharing barriers to care. Value is the quality of the health and well-being you get for the total cost you pay, which includes premiums, co-pays and deductibles.
Thus, channeling Lewis Carroll to understand our own Wonderland, it’s “curiouser and curiouser” that Ohio is not using its health Exchange to transform another part of the health insurance market.
Stay Tuned … This is just the Beginning
But the recent declaration to go with the federal Exchange, does not reveal the administration’s ultimate plans for the Exchange. The deadline for filing an Exchange “blueprint” has been extended to February 15, 2013 (probably to allow states like Ohio to make post-election recalculations). Through the blueprint, Ohio could still opt to engage in a “partnership” with the federal government, to maintain plan management functions and – if they so choose – navigation. Interpreters of the Governor’s November 16 declaration differ on whether the statement signals which way the administration will go on partnership. The statement declares that Ohio will continue to regulate its own insurance plans, implying partnership. But, “plan management,” under the federal partnership exchange regulations, involves selecting plans and other Exchange-related functions that the administration may want to avoid.
Also, who’s to say whether the legislature will remain comfortable with the administration’s decision to give up state control of the Exchange to the federal government? One could imagine legislators concluding that Ohio could do a better job of operating a competitive insurance marketplace for Ohioans than the federal government. In fact, some legislators have already said as much.
This conversation is far from over. By the time people start enrolling in the Exchange, starting – we hope – on October 1, 2013 and begin enjoying the benefits on January 1, 2014, we may see more conversations about the future of the Exchange.