Health Insurance Exchanges Fought In Okla., 28 Other States

By Wayne Greene, Tulsa World, Okla.

McClatchy-Tribune Information Services

Aug. 08-- Plans for state health insurance exchanges -- a centerpiece of the Obama administration's Affordable Care Act -- appear mortally ill if not completely dead in 29 states, including Oklahoma.

A health insurance exchange is an electronic marketplace where uninsured people can compare and purchase health insurance and, under the ACA, receive federal subsidies for the cost.

According to a tally kept by the Center on Budget and Policy Priorities, a Washington think tank that favors the federal health-care law, 14 states and the District of Columbia have established exchange mechanisms that are compliant with the law's requirements. Three of those states established exchanges through executive orders. The others were established through the legislative process.

In seven other states, legislation to establish exchanges is still pending, but time is getting very short for states to buy into the effort.

Under the law, exchanges have to be fully operational by Jan. 1, 2014, but there are several other deadlines along the way, and experts agree that any state that isn't well into the process of developing its plans at this point will find meeting the deadlines difficult.

Early in her administration, Gov. Mary Fallin accepted a $54 million federal grant to establish an exchange, but later, under political pressure from tea party elements in her own party, she rejected the grant.

Six other states also have rejected grants after first accepting them, according to the center's tally.

The Oklahoma Legislature considered exchange plans the past two years, but the idea also foundered under tea party pressure.

The federal law mandates that if a state does not establish an exchange, the U.S. Department of Health and Human Services will create one for it.

Since the U.S. Supreme Court found that the Affordable Care Act is largely constitutional, much of the debate in state capitals has turned from exchanges to plans to expand Medicaid under the terms of the law.

Exchanges and Medicaid expansion are two of the key elements of reducing the number of uninsured Americans, under the law.

Medicaid would cover the poorest people -- up to 133 percent of the federal poverty level. People in the middle -- up to 400 percent of the poverty level -- would either get insurance through their employers or buy insurance through an exchange and receive federal subsidies. Wealthier people would be responsible for their own health insurance or get it from their employers.

Currently, the federal poverty level for a family of four is $23,050.

The high court ruling made the Medicaid expansion essentially optional, and several Republican governors have already announced their states will not be accepting the money.

Gov. Mary Fallin has put off a Medicaid decision until after November's election. Fallin voted against the Affordable Care Act while she was in Congress and has said she hopes Mitt Romney is elected president and the law is repealed, but a combination of political forces have prevailed on her to put off any final decision on Medicaid expansion.

As an incentive to get states to accept Medicaid expansion, the federal law offers heavy federal subsidies. Federal tax money would fund 100 percent of the expansion the first three years. Subsequently, states would gradually pay a higher portion of the cost, eventually capping at 10 percent in 2020. In existing Medicaid programs, Oklahoma is currently paying about 36 percent of Medicaid costs.

Meanwhile, the National Governors Association has proposed a new possibility that might change the politics and the financing of the situation.

In a July 2 letter to HHS Secretary Kathleen Sebelius, association Executive Director Dan Crippen asked if the enhanced federal Medicaid subsidies would be available if states expand Medicaid, but not all the way to the 133 percent of poverty level.

Under such a scenario, more poor people would flow into health insurance exchanges and receive federal subsidies for purchasing private insurance instead of Medicaid.

Under one scenario mentioned in Crippen letter, a state could expand its Medicaid program only up to 100 percent of the poverty level, allowing it to enjoy many of the benefits of the law and reduce future costs to the states. No one below 100 percent of the poverty level is allowed to purchase insurance through an exchange, under the law.

One possibility under discussion would be for health providers -- hospitals and physicians -- to fund the poor patients' share of insurance cost, which would still leave the providers money ahead. The federal government has previously allowed a similar arrangement under a separate program, a high-risk pool that provides coverage for people with pre-existing conditions at normal insurance premium levels.

A partial Medicaid expansion would avoid one of the potential perversities of the Affordable Care Act -- if a state did not expand Medicaid at all, that would mean uninsured middle-class Americans would be able to get coverage through an exchange while the poorest population would be left out in the cold.

A partial Medicaid expansion also would shift the cost of health insurance coverage for the poor to the federal government. Instead of the states eventually picking up 10 percent of the cost, the federal government would pay all of the subsidy under the exchange.

The Crippen letter also suggests the possibility of states gradually phasing in expanded Medicaid coverage after 2014.

Krista Zaharias, senior press secretary for the National Governors Association, said the association hasn't received a response from Sebelius on the letter but the group understands HHS is working to provide an answer in a timely manner.

Alex Weintz, spokesman for Fallin, said she did not have a hand in preparing the letter, but the Governor's Office is reviewing all options.

Wayne Greene 918-581-8308

wayne.greene@tulsaworld.com

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Source: http://insurancenewsnet.com/article.aspx?id=353295&type=lifehealth

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