Missouri House begins work on health insurance exchanges
This article first appeared in the St. Louis Beacon, April 01, 2011 - A Missouri House panel laid the groundwork Thursday to carry out one of the most far-reaching provisions of the Affordable Care Act by voting to set up an exchange program that could make health insurance more affordable for small businesses and some individuals.
Although some groups are unhappy with parts of the Show-Me Health Insurance Act (HB 609), the legislation got a unanimous vote in the Health Insurance Committee. Members say the proposal would allow people to compare insurance premiums and benefits and find cheaper rates with the same ease that they might now turn to Travelocity, for example, to book a less expensive flight.
The legislation could create affordable health insurance for as many as 1 million Missourians when the system is up and running in 2014, says the committee's chairman, state Rep. Chris Molendorp, R-Belton. While that timetable might seem far away, Missouri might have to scramble to meet the federal mandate for putting much of the system in place by January 2013. This includes not only passing legislation but designing and testing a federally approved internet portal, completing actuarial and legal research, and devising a public engagement strategy for educating consumers about the benefits of the exchange.
In theory, HB 609 also would mean agreeing to expand Medicaid, now limited to only the poorest of poor Missourians. Missouri would have to offer Medicaid to all adults earning less than 133 percent of the federal poverty level, roughly $24,300 for a family of three. The federal health-reform law also includes a sliding scale for those earning up to 400 percent of the federal poverty level, or roughly $73,000 for a family of three. Insurers would no longer be allowed to impose higher rates because gender or health status, but they could charge higher rates based on age.
Many of Missouri's GOP and tea party members tend to oppose the expansion of Medicaid with the same enthusiasm that they have called for overturning the federal health legislation. So why does the House's GOP leadership feel comfortable lining up behind the insurance exchange mandate? Part of the reason, perhaps, is money. Like other states, Missouri is getting $1 million in start-up costs from the federal government to plan and set up the state's exchange. But by 2015, the law says state exchanges must be self-sustaining.
Another reason the GOP is embracing the exchange, says state Rep. Mary Still, D-Columbia, is a fear of what the federal government will put in place in states that refuse to set up their own exchanges.
"Having the federal act is very good," Still says. "Having them use the hammer of doing it if we don't has really made a difference."
But Molendorp says HB 609 "is about state's rights and the exercise of our sovereignty. It's important that (Health and Human Services Secretary) Kathleen Sebelius doesn't write our exchange."
Adding consumer voices
He says he reached out to Still and Rep. Tishaura Jones, D-St. Louis, to accommodate some of their wishes. Still says that until Democrats stepped in, Republicans seemed willing to write a bill with less consumer protection. She led the push to expand the exchange board to 17 members from 15 by including two additional at-large members. Democrats say one of the two slots will be filled by a consumer advocate and the other by someone with experience in negotiating health benefits for employees. Both new positions, the Democrats say, will add extra consumer voices to the board.
Moreover, Still says the panel gave insurance companies and brokers board terms of three years, while limiting the sole consumer representative on the initial 15-member board to an initial term of one year.
"That's an important issue," Still says, "because you could have a lot of influence if you're on the board for three years. I got him (Molendorp) to add that consumer position and make it a three-year appointment."
Molendorp says the Democrats felt the two additional at-large positions "would be a little more consumer friendly and I was in agreement with that."
The makeup of the 17-member board under HB 609 includes representatives from several state agencies, including social services, health and mental health; and a Republican and Democrat each from the House and Senate. The remaining members will be appointed by the governor and will represent insurance, business and consumers.
A change in the final bill involves the appointment of insurers and brokers to the board. An earlier version forbade the appointment of anyone with a direct financial interest in decisions made by the board. The exception was a consumer or employer seeking to buy health insurance. But the current version says board members can include people with financial interests in board matters, provided they make disclose their interests and recuse themselves from deliberating or voting when faced with a conflict of interest. The law says information about financial interests "would be available upon public request."
Amy Smoucha of Missouri Jobs With Justice says many community groups like the idea of Missouri creating its own insurance exchange "where insurers have incentives to give us good insurance plans at low prices."
She says HB609 "is going in the wrong direction" because it "gives significant power to insurers and brokers on the governing board, and that's very bad for consumers." She argues that decades of loose regulations of insurers in Missouri have resulted in high premiums and deductibles, and she is concerned that insurers on the board "would use their position to block real competition in the insurance exchange and keep premium rates high."
Molendorp responds, "The exchange is sort of like a farmers' market. If no farmers come to the market, you don't have a farmers' market. It was important to have the small insurance carrier have a seat on the board because we want as much insurance carrier participation in the exchange as possible."
But he concedes, "you certainly could make an argument for" allowing the voices of insurance carriers and brokers to be accommodated by representation on the exchange's advisory board rather than the voting board.
The larger point by Smoucha and others is whether Missouri will opt for loose regulation or impose stronger controls that, in Smoucha's view, would translate into lower premiums. Molendorp says the federal law's provision on what insurers spend on administrative expenses versus what they pay out in claims is "one of the safeguards" that could help control costs for all insurance exchanges. He says HB609 has no specific requirements allowing the board to set or negotiate premiums.
A user-friendly system
Molendorp feels one of the biggest immediate hurdles beyond drafting and approving legislation includes building a user-friendly system that explains in plain English the differences between various insurance plans. He says Missouri could reduce the amount of time needed to build its own portal by partnering with another state, such as Kansas, which is ahead of most in developing an exchange. On the day the Missouri House panel was reporting out its bill, Kansas officials were listening to presentations by online systems vendors seeking to win contracts to build Kansas' portal.
Molendorp points to California Choice run by a private entity as an example of how Missouri's portal might look and work. Users of the California system can click on the health benefits and compare hospital, outpatient, ER and mental health benefits, among others.
"We should approach it like a Travelocity model," Molendorp says. "We want to provide Missourians with a similar shopping experience when it comes to health insurance and let them buy it on the internet, from an agent or through an 800 number."
Funding for the Beacon's health reporting is provided in part by the Missouri Foundation for Health, a philanthropic organization that aims to improve the health of the people in the communities it serves.