Health Insurance Exchange
return to Policy & Advocacy Plan
January 12, 2012
OBJECTIVE
Ensure Washington State creates a robust health insurance exchange that allows more people to access health care in a system that is sustainable for providers.
BACKGROUND
The health insurance exchange is a key part of the federal Affordable Care Act. The exchange will allow consumers in the individual and small group insurance markets to compare a selection of qualified health insurance options, so consumers can select a plan that meets their needs. Beginning in 2014, the federal government will provide sliding scale subsidies to low income individuals – up to 400 percent of the Federal Poverty Level (FPL), about $89,000 for a family of four. In addition, in 2014 Medicaid will expand significantly to cover about 400,000 Washington State citizens earning up to 133 percent of the FPL – about $14,500 for a single adult. The exchange will assist consumers in enrolling them in health coverage, either through Medicaid or commercial insurance. Washington hospitals took significant cuts in the Affordable Care Act to fund these increases in coverage – about $2.7 billion over 10 years.
In 2012, the Washington State Legislature will consider legislation to guide the exchange’s operations. One important issue is the criteria for health plans to participate in the exchange. Some are suggesting the state select a limited number of plans based on cost, quality, or other factors. Doing so, however, would limit consumer choice and restrict market competition. A second issue is whether to offer a Federal Basic Health Program to the lowest income residents who would otherwise be offered subsidized insurance plans in the exchange. Different in structure from the state’s current Basic Health Plan, the Federal Basic Health Program would use the Affordable Care Act’s federal subsidies to reduce premiums or cost sharing for these lower income consumers and/or improve benefits beyond the exchange plans. If adopted, the Washington State Hospital Association (WSHA) is concerned the program will set provider rates at unsustainable levels, such as Medicaid rates. As we have seen with Medicaid, low payment levels limit access to necessary health services for enrollees, including primary care or specialty services. Without access to services and care management, enrollees seek expensive care at hospital emergency departments.
WSHA POSITION
Washington State should create a viable health insurance exchange that promotes access to providers and offers a large number of health plans for consumers. The state should not limit plan entry in the exchange in initial years because of unintended consequences on this new marketplace and limitations on consumer choice. The exchange should add value to the health care system and not over-regulate plans or disrupt plan/provider negotiations. A Federal Basic Health Program should only be adopted if it still leaves the exchange viable. If adopted, such a program must offer providers adequate rates to sustain their participation levels on a long term basis. Current Medicaid rates are unsustainable for health care providers and inadequate to ensure appropriate access for consumers.
