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Insight Health Insurance Exchanges – What Idaho’s Health Care Providers Should Know

By Thomas J. Mortell,

A major provision of the Patient Protection and Affordable Care Act of 2010 (PPACA) is the implementation of health insurance exchanges. In an effort to dramatically expand the number of individuals with health insurance, PPACA requires that each state have a “health insurance exchange.” It stands to reason that, all other things being equal, Idaho’s health care providers should certainly benefit if more Idaho residents have health insurance.

What is a Health Insurance Exchange?
A health insurance exchange is an internet-based marketplace or web portal for the purchase of qualified health insurance plans. Some commentators have compared an exchange to popular travel websites that allow consumers to shop for and purchase vacation deals. According to their proponents, insurance exchanges will provide one-stop shopping for qualified health plans and make purchasing health insurance easier and more understandable. Exchanges are intended to interactively assist individuals and small businesses by providing pricing and other information necessary to purchase health insurance.

In addition, an important function of the exchange is to direct eligible individuals into a state’s Medicaid system. For those not eligible for Medicaid, PPACA provides sliding-scale subsidies for residents who earn up to 400 percent of the poverty level, a significant portion of Idaho’s residents. However, in order to receive PPACA’s premium subsidies, private insurance must be purchased on a qualified exchange. As a result, it certainly stands to reason that most, if not all, private health insurance will eventually be purchased on an exchange.

State or Federal Exchange?
Unless Idaho and other states are successful in overturning PPACA before the United States Supreme Court, Idaho will have a health insurance exchange. Under PPACA, states may either establish, control and operate their own exchanges, or allow the federal government to do it for them. For states that choose to establish and operate their own exchanges, federal funding is available to cover the costs of setting up the state’s exchange. That funding is available to Idaho. Subject to appropriation by the Idaho legislature, the federal government has granted Idaho access to up to $20.3 million in federal funds to establish a state-based health insurance exchange. If Idaho chooses to not pursue a state-based exchange, the federal government will establish a federally-run exchange for Idaho.

Draft Legislation to Establish a State-Based Exchange
The legislative effort to establish an Idaho-based exchange has been led by the Idaho Department of Insurance, with extensive opportunities for input from a broad cross-section of stakeholders, including health care providers. This legislation provides for a health insurance exchange governed by a board consisting of Idaho residents appointed by Idaho’s governor. In its current form, the legislation provides mechanisms for input by Idaho medical providers and other interested groups. The draft legislation is widely supported by Idaho’s business community, who prefer a state exchange to a federal exchange. If a federal exchange is implemented, most experts believe that Idaho, including its health care providers, will have essentially no control over the structure or operation of the federal exchange. This draft legislation is currently stalled in the Idaho House of Representatives. Unfortunately, legislators are reluctant to take any action that will be seen as an endorsement of health care reform.

What is the Timeline for Implementation of an Exchange?
Whether controlled by the state or federal government, each state will have a certified health insurance exchange by January 1, 2013 and an operational exchange by January 1, 2014. If Idaho chooses to establish an Idaho-based exchange, most experts believe that Idaho’s legislature must pass the enabling legislation during the 2012 legislative session in order to allow the state to meet PPACA’s deadlines.

Unfortunately, waiting for the Supreme Court to decide Idaho’s future is fraught with risk. If legislation establishing a health insurance exchange is not passed and the Supreme Court upholds PPACA, Idaho will be left with no backup plan. Failure to pass enabling legislation will likely result in the federal government establishing and operating a federal health care exchange for Idaho’s residents.

If you have questions about these or other legal issues, please contact Thomas J. Mortell or a member of our health law group or call 208.344.6000.

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