Health Insurance Exchanges

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The Affordable Care Act requires every state to have at least one health insurance exchange in place by 2014. The Arizona Chamber Foundation Executive Director Suzanne Kinney talks about the issues and opportunities facing Arizona as it considers how to establish an exchange.

Ted Simons: The affordable care act requires states to have at least one health insurance exchange in place by 2014. States can set up and operate their own exchange or let the federal government do it for them. In April the Arizona chamber foundation issued a policy brief on the issue and here to tell us about it is Suzanne Kinney, executive director of the Arizona chamber foundation, a research and education arm of the Arizona chamber of commerce and industry. It's good to have you here. Thanks for joining us.

Suzanne Kinney: Glad to be here.

Ted Simons: What is a health insurance exchange?

Suzanne Kinney: A health insurance exchange exists for two purposes. One is for individuals and small businesses to compare and contrast insurance plans and then make a purchase, and the second is for eligible individuals and small businesses to get the tax credits and premium subsidies that affordable care act is going to be putting into place.

Ted Simons: So this is an online marketplace for folks to shop private insurance companies and see what works best for them?

Suzanne Kinney: That's right. It would be an online vehicle to make those kind of decisions.

Ted Simons: This is for individuals and small businesses? Who is eligible here?

Suzanne Kinney: It is. It would be possible for a state to have two separate exchanges, one for individuals and a separate one for small businesses or to combine both those into a single exchange. So individuals or small businesses can compare and contrast and purchase, but only those that meet certain income levels for individuals would be able to access the tax credits or the subsidies and likewise for the small businesses to get the subsidies they would have to meet certain wage threshholds.

Ted Simons: How small a business are we talking here?

Suzanne Kinney: Well, the affordable care act sets the business number at 100 employees, however if states choose to operate their own exchange they could lower that to 50 or fewer.

Ted Simons: Interesting. For individuals who want to get involved, what is the process? Once everything is up and operational do they go online? How do they get their feet wet with this?

Suzanne Kinney: There's going to need to be a significant public outreach and educational process around this. But essentially it would be a matter of going on to the website and if it's set up in a user-friendly way it should be pretty easy to navigate through.

Ted Simons: As far as the exchanges are concerned, I read from your sheet, your information sheet, it can either be an act purchaser or market facilitator exchange. What does that mean?

Suzanne Kinney: That's right. This is where we get to the decision of whether the state moves forward with creating its own exchange or if the state decides to default and let the federal department of health and human services set up the exchange. If the state moves forward, that will be a choice. A market facilitator will be an information resource for consumers. The other option is to have the government play a much more active role in terms of deciding which health insurance companies are able to offer policies on the exchange and possibly even to do some negotiating of the race those insurance companies are able to charge consumers.

Ted Simons: I was going to say, who does decide who can get into this marketplace? Do the insurance companies have to meet certain criteria?

Suzanne Kinney: Right. So again, if Arizona does not move forward with creating one, the federal government will make all those decisions. If Arizona does decide to do down that path, we would have the opportunity to decide what constitutes a qualified health plan and what is the essential benefits package. There are parameters set around that, but the essential benefits packages, what is that minimum that a health insurance company has to provide in terms of coverage. So if Arizona goes down that route, then we would be able to decide what's in that package.

Ted Simons: Are those like the benchmark things that each plan has to have?

Suzanne Kinney: That is. That is. What would be defined as that set of coverage that all plans would have to offer in order to participate.

Ted Simons: So what has Arizona done? I know the state is kind of preparing for this a little bit, but how far has the state gone in getting something at least up and almost operational?

Suzanne Kinney: The state has taken a few steps. It's been through the governor's office. So all states received an initial $1 million grant to do some very preliminary work on what an exchange might be designed. Our state also is one to receive a $30 million grant to begin the technology infrastructure investment that would be necessary. So the governor's office has led that effort, but in order for Arizona to actually set up its own, the state legislature would need to get involved and in particular to decide what the funding mechanism would be.

Ted Simons: What kind of funding mechanism options are we talking about here?

Suzanne Kinney: If we default to the federal government department of health and human services has indicated that they would put another fee on the insurance companies that participate in the exchange. So that's the route they would take. If we move forward, then we would have whatever choice we wanted to make, whether it would be something on the insurance or some other choice. That would be entirely up to our state legislature and obviously the people of Arizona to make that decision.

Ted Simons: Compare, if you would, going it with the state exchange or simply going with the Feds. Sounds like 16 states have already started something and 14 of them have deferred to the Feds.

Suzanne Kinney: Right.

Ted Simons: Does it make more sense do you think? What would be the arguments to go with the federal model as opposed to the state model?

Suzanne Kinney: For the federal model it means that we wouldn't need to make decisions. Those would be made by the federal government. The operation, who qualifies, in terms of insurance providers and what benefits they must cover, a number of other decisions. We wouldn't have to pass any legislation. But if we want more flexibility, if we want to model that is specific to Arizona, then we would need to make that decision to create our own exchange, define who we want to participate in the market, what type of choices we want to have available.

Ted Simons: And so that's something that the state still needs to decide, doesn't it?

Suzanne Kinney: That's right. A lot of people, particularly policy makers, have been waiting to see how the Supreme Court ruled. We do have an answer to that now. So we would need to meet certain time lines, certain deadlines if we wanted to create our own exchange.

Ted Simons: Isn't there a deadline coming up first of the year?

Suzanne Kinney: There is. We would have to indicate to department of health and human services that we do intend to create our own and have made certain progress by that point. This is moving pretty quickly. October 2013 is when open enrollment starts. Just over a year from now.

Ted Simons: Is there a concern all of this is going to be too confusing to folks to figure out and if so, what kind of information models are out there to help folks navigate all this?

Suzanne Kinney: Well, in an ideal scenario the website would be designed in a way that makes the purchase decision simpler than it is now because the consumer would be able to see exactly what the prices are for different plans and what each of those plans would cover. So hopefully we could have something that makes it a bit easier.

Ted Simons: Very good. Good to have you here. Thanks for joining us. We appreciate it.

Suzanne Kinney: Thank you.

Suzanne Kinney:Executive Director, Arizona Chamber Foundation;

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