Idaho businesses have paid close attention to the recent debate over whether and how Idaho should establish a state-based health insurance exchange. This is an issue at the intersection of business, law and politics.
If a state fails to establish its own exchange by the deadlines contained in the PPACA regulations, then the federal government will establish and operate the exchange in that state. A federal exchange will be structured around federal administrative and policy priorities. Citizens of a small state like Idaho will likely lose a significant amount of local control over the exchange if Idaho allows the federal government to establish and operate Idaho’s exchange.
In the wake of the U.S. Supreme Court’s decision upholding PPACA, Gov. C.L. “Butch” Otter established a working group consisting of representatives from the private and public sectors. After three and a half months of careful deliberation, the working group recommended that Idaho establish a state-based exchange. Since then, the governor has adopted the working group’s recommendations and introduced legislation in the Idaho Senate that would establish an Idaho-based exchange. Now it’s up to Idaho’s Legislature to take the next step and pass legislation that establishes an Idaho health insurance exchange.
A state-based exchange will provide a great deal of local control over exchange design and operation within federal guidelines. The following examples illustrate the flexibility of a state-based exchange:
• The composition of the board of a state-based exchange will be determined locally. The board must be composed of local stakeholders and cannot be controlled by insurance brokers or insurance companies. As some legislators have suggested, the exchange board can certainly have legislative oversight.
• A state-based exchange that is controlled by local stakeholders will be able to work with Idaho small employers, individuals, brokers and insurers to identify the kinds of qualified health plans that suit local needs and also satisfy minimum federal standards. For instance, a state exchange could emphasize “consumer driven” plans that feature high deductibles, tax-advantaged savings plans and lower premiums, or more traditional plans that offer higher premiums and lower deductibles.
• A state-based exchange can be designed to be entirely self-supporting and have no access to state tax dollars. Federal dollars are available for states to implement exchanges, but by 2015 the exchanges will cease to receive federal support.
In a state-based exchange, local stakeholders, including representatives of local business, will have control over these and other variables. A state-based exchange offers local stakeholders – including businesses, consumers, insurers and health care providers – an unprecedented opportunity to work cooperatively to set priorities and design a health insurance system to achieve stated goals, whether reduced costs, increased benefits or other priorities. A federal exchange, by contrast, will likely offer a “one size fits all” approach that will not be tailored to local needs and preferences.
Business owners who seek to comment on the establishment of a state exchange may contact their state legislators or the governor’s office.
Mr. Mortell is a partner at Hawley Troxell and chairs the firm’s health law practice group. He can be reached at firstname.lastname@example.org. Mr. Hamilton is an attorney in Hawley Troxell’s corporate group and his practice focuses on insurance, health care law, and corporate transactions. He can be reached at email@example.com.