Posted by: Conor Green, Strategic Risk Advisor
As part of the much debated Patient Protection and Affordable Care Act (Healthcare Reform), the Federal Government will make a healthcare exchange available to small employers if their own state government chooses not set up its own exchange. A health insurance exchange is a set of government-regulated and standardized health care plans, from which individuals may purchase health insurance eligible for federal subsidies. Here in Wisconsin, Governor Walker made the decision to defer the responsibility for a state exchange to the federal government, joining 32 other states that have done the same. The decision to make this deferment to the Federal Government was based on the need to avoid the administrative costs and complexity of establishing a “duplicate” exchange. Governor Walker felt that the costs of establishing an individual Wisconsin exchange would be much greater than the benefit Wisconsinites would receive from having their own unique and individual marketplace.
The decision to defer this responsibility to the Feds by the majority of states seems to be the right decision at this time due to that aforementioned complexity and cost. Last week, the Federal Government announced that the “choice option” would be delayed another year for employees participating in the exchange. What this means is that employees will not be able to pick and choose amongst different insurers and plans on the exchange in an “a la carte” fashion. The employer will have to make a decision on a single plan for its employees in the exchange. The administration cited “operational challenges” as a reason for the delay in flexibility. As a result, it said, most small employers buying insurance through an exchange will offer a single health plan to their workers next year.
The Obama Administration told employers in 2011 that the small business exchange would “enable you to offer your employees a choice of qualified health plans from several insurers, much as large employers can.” In addition, it said, the exchange would “consolidate billing so you can offer workers a choice without the hassle of contracting with multiple insurers.” It seems that the complexity of enrollment and billing reconciliation with insurers is something that they did not account for in establishing the law’s implementation timeline.
A stated goal of PPACA was to create “consumer choice” and stimulate competition amongst insurers. It seems like the level of “consumer choice” that was envisioned in the original law will be something for the future (January 2015). For now, let’s wait and see whether the plans that will be offered under PPACA , for January 2014, can be considered “affordable”.