Georgia faces big decision on insurance exchanges

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Georgia faces big decision on insurance exchanges

Where states stand on health insurance exchanges

* Established a state exchange: California, Colorado, Connecticut, District of Columbia, Hawaii, Kentucky, Maryland, Massachusetts, Nevada, New York, Oregon, Rhode Island, Utah, Vermont, Washington, West Virginia

* Decision not to create state exchange: Alaska, Florida, Louisiana, Maine, New Hampshire, South Carolina, South Dakota, Texas

* Studying options: Alabama, Arizona, Idaho, Indiana, Iowa, Michigan, Minnesota, Mississippi, Montana, Nebraska, New Jersey, New Mexico, North Carolina, Pennsylvania, Tennessee, Virginia

* No significant activity: Georgia, Kansas, Missouri, North Dakota, Ohio, Oklahoma, Wisconsin, Wyoming

* Partnering with federal government on an exchange: Arkansas, Delaware, Illinois

* As of Sept. 27, 2012

Source: Kaiser Family Foundation

How health insurance exchanges will work

The creation of health insurance exchanges is a key element of the 2010 Patient Protection and Affordable Care Act. Starting Jan. 1 2014, consumers will be able to go on to these online marketplaces to compare the quality and affordability of private insurance plans.

Tax credits to help make coverage more affordable will be available to U.S. citizens and legal immigrants who purchase coverage in the exchange and who have an income up to 400 percent of the federal poverty level, or $92,200 for a family of four in 2012.

Source: Kaiser Family Foundation

Georgia must soon decide whether it will build a new health insurance “exchange,” or marketplace — where hundreds of thousands of consumers will shop for coverage — or cede control of it to the federal government.

For months now, Gov. Nathan Deal and other Republican governors have put off major decisions tied to the Affordable Care Act in hopes the health law will be repealed if Mitt Romney wins election. But on Nov. 16 states must declare whether they will build and run state-based health insurance exchanges, a cornerstone of the law, or leave it to the federal government.

While Deal has yet to announce a decision, experts say even if Georgia wants to do its own exchange there likely isn’t enough time to build it and have it up and running by the Jan. 1, 2014 deadline.

“Georgia and other states are just too far behind in the planning to realistically say they’re going to operate an exchange,” said William Custer, a health care expert at Georgia State University.

Whoever manages it, an estimated 900,000 Georgians will shop on the exchange — an online marketplace designed to make it easier for individuals and small businesses to compare the quality and affordability of private health insurance plans. Federal tax subsidies, a key element of the exchanges, will help many of Georgia’s nearly two million uninsured obtain coverage.

Industry observers say a state-created exchange could more quickly respond to market forces unique to Georgia and retain more control over regulations historically overseen by the states.

If the law stands, “then by choosing not to do anything about the exchange, you essentially cede authority to someone other than Georgia,” Custer said.

Earlier this month, Georgia opted to leave the decision on what baseline health benefits insurance plans must have to the U.S. Department of Health and Human Services.

Georgia is one of more than 20 states that challenged the health law on constitutional grounds, in part saying the federal government was overstepping its authority. The U.S. Supreme Court ruled to uphold the law in June, though it said states could not be forced to expand the massive Medicaid health program for low-income Americans.

Romney has vowed to repeal the health law if elected, though he would likely need a Republican-controlled Senate to do so.

Georgia Insurance Commissioner Ralph Hudgens, a proponent of states’ rights, explored potential opportunities for the state to retain some authority in the exchange process but ultimately determined a Georgia-created exchange would not be in the state’s best interest.

“Such an exchange would be subject to the federal law, the mountains of regulations that have been promulgated since its passage, and the regulations that, to this date, have still not been finalized,” Hudgens said in a statement to The Atlanta Journal-Constitution this week.

Ideally, a locally-controlled exchange would be able to better respond to changing market forces versus a one-size-fits-all approach by the federal government, said Graham Thompson, a spokesman for large insurers in Georgia.

At the same time, many of the final rules and regulations on what the exchanges will actually look like haven’t been released, Thompson said.

“You can’t play the board game without reading the rules,” he said, adding that the most prudent option is to wait on any major decisions until after the Nov. 6 election.

While the federal government will have requirements every exchange must meet, Georgia would still have some control over how an exchange would be structured, who would run it and how it would contract with health plans.

Some state exchanges may just be a website where consumers can go for prices and quality data, Custer said. California, on the other hand, is using its exchange as leverage to negotiate prices with insurance companies, he said.

As of the end of September, 15 states and the District of Columbia had set up insurance exchanges and three were planning to partner with the federal government on a system, according to the nonprofit Kaiser Family Foundation. At least eight states, including South Carolina and Florida, have rejected the idea outright. Others are studying options, and some – including Georgia – have taken no action.

“The most important thing is that consumers can go to the health insurance exchange, that there’s information that’s easily understandable, that they have the right information and tools there to make decisions,” said Cindy Zeldin, executive director of the nonprofit advocacy group Georgians for a Healthy Future.

Some states’ lawmakers have not talked favorably about the Affordable Care Act in general, Zeldin noted. She said if a state doesn’t want to seriously enforce robust consumer protections, then it might be better for the federal government to take charge.

States can get federal money to set up exchanges, but it isn’t clear how they could be made financially self-sustaining and not a burden on state treasuries once they’re up and running, said Ron Bachman, a senior fellow at the Georgia Public Policy Foundation, an Atlanta-based think tank focused on market-oriented policy solutions. The federal government has already doled out more than $1 billion to states in grants to plan and build exchanges, including a $1 million planning grant for Georgia, according to Kaiser.

Bachman said private exchanges should be implemented instead, adding he’s unsure the federal government has enough resources and the capability to run the exchanges.

“It’s an enormous expense,” he said. “You’re talking about establishing a really large business.”

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