It is not news to Idaho’s business community that the state Legislature recently passed the Idaho Health Insurance Exchange Act. Few, however, are aware of exactly what the act does and what steps are next for the implementation of a state-based health insurance exchange.
The act passed this year’s legislature with the strong support of Gov. C.L. “Butch” Otter and the business community. Beginning with the recommendations of the governor’s 2012 Idaho Health Insurance Exchange Working Group, the primary arguments advanced in favor of a state-based exchange were local control and flexibility. As the working group pointed out, a state-based exchange allows local stakeholders, rather than the federal government, to determine the exchange’s direction in 25 key areas of structure, governance, financing and operations. The exchange’s yet-to-be selected board of directors has the daunting task of determining the exchange’s direction in most of these 25 areas.
The act sets many of the ground rules for the exchange’s structure and governance.
For structure, the act provides that the exchange will be an independent, governmental-like entity that fulfills a governmental function but is not a state agency. Exchange employees will not be considered state employees, and exchange debts are not considered state debts. The exchange has no power to raise taxes, and it is not entitled to funding from the state.
For governance, the act provides that the exchange will be governed by a 19-person board that is appointed by the governor and confirmed by the Senate. The board will comprise three legislators, three consumer representatives, four representatives of small employers, two representatives of the health care provider community, three insurance company representatives, two representatives of insurance agents and brokers, the director of the Idaho Department of Insurance, and the director of the Idaho Department of Health and Welfare. All meetings of the board are to be streamed over the Internet and will be subject to Idaho’s Open Meetings Act. In addition, the exchange will make an annual report to the legislature and undergo annual audits.
The act is less detailed regarding exchange financing and operations. The act provides that the exchange must develop procurement policies and that vendor contracts be procured through open bidding. The act also provides that the exchange should favor Idaho vendors.
For the most part, though, the act leaves operation of the exchange to the discretion of the exchange’s board, which must draft and adopt a written plan of operations that is consistent with the act. Accordingly, the board will determine Idaho’s direction on several key matters:
- What operations will the exchange perform, and what operations will be outsourced? For outsourced functions, who will provide these functions to the exchange?
- How will the exchange be financed? Will the exchange rely solely on participant fees, or will the board secure other sources of revenue?
- How will the exchange provide customer education, outreach and support? What will be the role of licensed brokers and agents?
- What will be the requirements for insurance plans offered on the exchange, and who will certify that the plans meet the requirements? How will the board exercise its discretion to determine what plans are in the best interest of Idahoans?
- What will be the rules for obtaining and terminating individual coverage?
- What will be the rules for obtaining and terminating small employer group coverage?
The exchange must be open to accept applications for health insurance coverage no later than Oct. 1. So the board has just a few months to address the operational issues identified above, negotiate vendor contracts, adopt policies and procedures, and actually implement an exchange.
Fortunately, the legislature has placed the task in the hands of a state-established body that is directed by a board that represents a broad group of local stakeholders. As a result, starting in October, individuals and small employers will have the opportunity to purchase health insurance from a marketplace that has been designed by Idahoans for Idahoans. By purchasing insurance on the exchange, those individuals and businesses will be in a position to benefit from the federal subsidies available to many purchasers of insurance under the Affordable Care Act.