The Affordable Care Act requires all States to set-up a health insurance exchange and have it operational by 2014. The exchanges are where individuals and families find out whether they are eligible for assistance to buy insurance and where they choose a health plan. The exchanges will serve individuals who are US citizens or legally resident immigrants as well as employees of small firms and their dependents if such firms choose to use the exchange to provide coverage to their workers. Before 2016, States decide whether companies using the exchange may have a maximum of 50 or 100 full-time employees. Beginning in 2016, all firms with 100 or fewer workers may use the exchange. Starting in 2017, States have the option of opening the exchange to larger companies. Tax credits subsidize premiums for individuals at or below 400 percent FPL who receive coverage through the exchange, if they lack affordable access to minimally comprehensive employer-sponsored insurance. Additional subsidies help reduce out-of-pocket costs for those with incomes at or below 250 percent FPL. An exchange may offer only “qualified health plans” that satisfy federal requirements, including coverage of essential benefits. A single application form will be used for Medicaid, CHIP and subsidies in the exchange. HHS will issue the form but a State can use its own version, if approved by HHS.
Small businesses, the self-employed and low-income families who are currently priced out of the health care market should be guaranteed affordable coverage. Discrimination based on health status, gender and other factors should be eliminated.
Learn more about Exchanges, including if your State has made any progress toward the 2014 deadline:
The exchanges are an opportunity for each State to organize the chaotic and inefficient small group and individual insurance markets. The goal is a better-functioning market to improve choices and value for individuals, families and small businesses. Exchanges may become a place where many individuals and businesses purchase coverage without subsidies.
1. States have many choices for setting-up their exchange.
- Each State can choose whether to establish an exchange on its own, in partnership with the federal government, or have a federally-run exchange.
- States may create separate exchanges for individuals and small businesses, or they may combine the two. States can also establish a publicly administered plan to compete in the exchange.
- States may create a statewide exchange, sub-divide the state regionally, or join together with other states to operate a multi-state exchange.
- States also may elect not to create an exchange, in which case the federal government will do it for them. The federal government can also determine that a state is unable to adequately perform the necessary functions.
- States that decide to operate a health insurance exchange rather than leave that function to the federal government, can structure the exchange to make a wide range of health plan choices available to as many residents and employers as possible.
2. States need to make decisions about exchange governance, including:
- Whether the exchange is inside or outside state government, whether it resides in an existing agency, a new agency or has independent status.
- Participation by physicians in the governance of exchanges is critical.
3. Critical State exchange functions include:
- Selection of participating health plans and review of their rates
- Standardized benefit information
- Standardized data collection across plans and holding plans to quality/outcomes standards
- An effective risk adjustment mechanism to assure that plans have sufficient resources to provide services to enrollees with high health needs.
4. Federal funding & accountability:
- The federal government provides grants to States to cover start-up and other administrative costs through the end of 2014. Starting on January 1, 2015, exchanges must raise their own funds. This can be done through surcharging insurance premiums; assessing health plans, employers or individuals; appropriating State General Fund dollars; or other ways. Exchanges must keep an accurate accounting of all expenditures, submit annual accounting reports to HHS, cooperate with HHS investigations, and submit to federal audits.
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Actions taken by States to Date
States that enacted exchange legislation prior to ACA: Massachusetts and Utah
States that enacted exchange legislation post-ACA: California, Colorado, Connecticut, District of Columbia, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, Washington and West Virginia
States whose Governors issued executive orders to establish exchanges: Indiana, Kentucky, New York and Rhode Island
States that have indicated they will defer to a federally-facilitated exchange: Florida, Louisiana, Maine, South Carolina, and Wisconsin
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Federal HHS Guidance
HHS has been issuing guidance to States through its Center for Consumer Information and Insurance Oversight (CCIIO) including guidance on the certification process and details on how a federally-facilitated exchange will operate. The following is noted in HHS’ final rule on exchanges:
-Exchange governance: physicians must be allowed to participate in the governance of the exchanges and states must have conflict of interest and disclosure requirements for exchange board members.
-Consultation & stakeholder participation: each exchange is required to consult with stakeholders. Health care providers are listed and must be consulted regularly by an exchange.
-State preemption: existing State laws on patient/physician protections are not preempted.
-Network adequacy: plans must ensure that all provider networks include essential community providers and maintain a network that is sufficient in number and types of providers including to ensure that all services are accessible without unreasonable delay.
-Scope of practice: all provider contracts must be fully compliant with state scope of practice laws; however, HHS recommends that exchanges consider a broader definition of primary care providers.
-Regional exchanges: HHS said it will review patient protections in regional exchange blueprints on a case-by-case basis.
-CO-Ops: will be able to participate in exchanges.
-Multi-State plans: multi-state plans are deemed certified by exchanges; the federal Office of Personnel Management (OPM) will have wide regulatory authority over multi-state plans; these plans are exempt from exchange recertification and decertification processes.
-Funding: States are required to provide ongoing, self-sustaining funding for their exchanges beginning January 1, 2015. States have discretion on how to raise funding; user fees on participating issuers is one option.
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