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The scene is familiar: A group of new employees gathers in a dimly lit conference room and watches an introductory video on a company’s health insurance plan. The lights come back on and a human resource representative asks if there are any questions.
Mostly, nobody says a word. They are either more concerned with getting the meeting out of the way so that they can start their new jobs — or they are too confused by the presentation to know where to begin.
And so they fill out an enrollment form with only a few minutes of preparation. Yet the decisions they have just made will impact their health — and their pocketbooks — for a long time to come.
The complexity of shopping for insurance was a problem that Congress recognized during the health care debates in 2009 and 2010. State insurance exchanges emerged as the solution.
State insurance exchanges are designed to simplify the process of shopping for health insurance and to lower the costs as well.
In Landmark: The Inside Story of America’s New Health-Care Law and What It Means for Us All, The staff of the Washington Post explain that this will be accomplished in two ways:
First, rates will be reduced by pooling together the medical risks of those who would otherwise be looking for insurance either on their own or with a small number of coworkers.
Second, insurance companies will be required to provide a certain set of benefits and standardized levels of care (bronze, silver, gold, and platinum) that make it easy to compare the plans of one company with those of others side by side.
While insurance companies don’t have to participate, the exchanges represent millions of potential new clients, many of whom will receive federal subsidies.
There will be three forms of subsidies available—all of which are based on income. First, Medicaid standards will be relaxed. In Utah, this means that more than 110,000 individuals will be newly eligible for Medicaid when the new standards take effect.
Second, certain individuals will be able to receive credits backed by the government which reduce how much of their premiums they are responsible for.
Lastly, the government will limit the out-of-pocket spending which certain individuals are responsible for and cover the difference.
So who is it that the exchanges are designed for?
Primarily, the state insurance exchanges are being created for those without insurance as well as employees of small businesses. Beginning in 2014, every state will be required to have an operational state exchange or the federal government will take over.
But not every state wants to participate. Many are upset that the federal government is infringing on what they consider to be a responsibility of the states. They want a market solution to the problem, not a federal mandate.
They are also frustrated by the enormity of the challenge, the limited time frame, and the lack of information. Panic, confusion, and frustration abound as states look for guidance on what to do.
And many of them look to Utah.
Long before health care reform was on the national radar, Utah governor Jon Huntsman Jr. and other government leaders recognized there was a problem. And rather than waiting for someone else to come up with a solution, they devised one of their own.
We wanted to build something that was going to be private sector, not state-run. We believe that the less government involvement, the more successful we're going to be in creating a competitive market place that will help us drive down the cost for the consumer and help the consumer be more informed.
The Utah Health Exchange is the result of several years of concentrated effort. The process began in 2005. After several years of work the state opened up the exchange for beta-testing in 2009. After some fine-tuning, they opened for business in January 2010 and are currently home to more than 140 different insurance plans.
Utah’s reputation as a leader in online state insurance exchanges is well known. In fact, knowledge- hungry representatives from 31 states — and the Department of Health and Human Services — recently gathered in Utah to learn from Utah’s experience.
Not only has Utah paved the way when it comes to insurance exchanges, but they have done so with a desire to maximize input and participation from the private sector.
Utah Health Exchange Director Patty Conner said, “We wanted to build something that was going to be private sector, not state-run. We believe that the less government involvement, the more successful we’re going to be in creating a competitive market place that will help us drive down the cost for the consumer and help the consumer be more informed.”
In other words, Utah was devising a collaborative private- public solution to health care-related problems years before reform was seriously considered on the national level.
And Utah shows no signs of slowing down. Conner indicates that they are pouring over the recently released regulations from HHS to determine what changes they need to make in order to be ready for 2014. Yet she also emphasizes that while Utah intends to comply with federal regulations, the Affordable Care Act was not the catalyst for the Utah Health Exchange.
“Regardless of what happens,” Conner said, “this program will move forward.” She also said that Utah will remain committed to alleviating the cost and complexity of health care no matter what happens on a national level.
It is no surprise that other states are looking to Utah for guidance. The state insurance exchanges are an essential component of health care reform and will service the insurance needs of millions of people. The Affordable Care Act could not accomplish its goals of making insurance more accessible without state exchanges.
And that leads back to the goals of health care reform. Congress wants low-cost, high-quality health insurance to be more universally available. But is the Affordable Care Act a viable solution to the health care crisis?
That is the subject of the next article in this series.
This is the fifth in a series of nine articles addressing the topic of health care reform.
Kurt Manwaring is pursuing a graduate degree in public administration at the University of Utah. He is the owner of Manwaring Research & Consulting and maintains a personal blog at www.kurtsperspective.blogspot.com.