State of the States: Health Insurance Exchanges

November 2, 2012

With much of the Northeast paralyzed by Hurricane Sandy and many other states awaiting the outcome of Tuesday's elections, there were few notable exchange developments this week. However, we left our readers with a cliff-hanger last week, wondering what the Idaho Health Insurance Exchange Working Group recommended to Governor C.L. "Butch" Otter (R). Let’s start there. 

After a long day of presentations and reviewing data, the Health Insurance Exchange Working Group voted 11-2 to recommend to Governor Otter that Idaho designate a non-profit entity to host a state-based exchange. In the working group’s final report, according to estimates by KPMG, a state-based exchange could cost $77 million to design and implement and an additional $10 million per year in operational costs. The final decision on Idaho’s exchange now lies with Governor Otter. Jon Hanian, a spokesman for the Governor, told reporters on Monday, “It’s important to note that this is a non-binding recommendation.” While exchange-enabling legislation failed to come up for a vote in the Idaho legislature during the most recent session, the Governor backed legislation to create a state-based exchange in January 2012.

Buried in the Insurance Exchange Working Group report were a few details that exchange watchers may find interesting. On page 29, the report summarizes some of KPMG’s views on the Federal Data Hub and FFE based on their informal discussions with CCIIO. From the report:

“The most recent information KPMG received on the Federal Data Hub is that the Federal government would NOT be charging the states for its use. Please note that this position has not been formally adopted or communicated in writing, but it was conveyed to KPMG at least twice in the past months in direct conversation with CCIIO. KPMG has not obtained any information on the other services, but we expect that the Federal government will want to charge some type of fee to the Issuer as part of the PMPM costs just like a state would need to do if they were running their own Exchange (in order to be self-sufficient). KPMG has no visibility into what the cost will be, but we think that with the volume that the Feds will have coming through the FFE, the PMPM costs can potentially be lower than if a state does is on their own (e.g., chooses a SBE).”

Expect additional guidance on the Federal Data Hub and financing of the FFE from CMS in the future.

Meanwhile on the West Coast, the Board of the California Health Benefit Exchange met this week and made a flurry of decisions. During the meeting, the Board voted to name the Exchange "Covered California" with a tentative tagline of "Your destination for affordable healthcare." The Board also reversed a previous decision and voted to allow stand-alone vision plans to be sold on the individual exchange. Finally, the Exchange revealed that more than 30 carriers have expressed non-binding interest in offering health insurance on California’s exchange. At least four carriers, Anthem Blue Cross, Blue Shield of California, Health Net and Kaiser Permanente, have expressed preliminary interest in offering plans statewide. In addition, many smaller insurers and hospital systems are looking into offering insurance in specific geographic regions.

Finally, next Tuesday, Missouri voters will get their say on whether Missouri’s executive branch has the authority to create a state-based exchange without a vote by the legislature or a public referendum. The initiative, Proposition E, was placed on the ballot after Republican lawmakers became concerned that Governor Jay Nixon (D) would hire consultants to begin planning for an exchange without consulting the legislature.  Neither sitting Governor Jay Nixon nor his opponent in the gubernatorial election, Dave Spence (R), have recently indicated an interest in creating a state-based exchange for Missouri. Also of interest, the language of Proposition E specifically forbids any state agency or state employee from providing “assistance or resources of any kind” to create an FFE in the state.  

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