Health Insurance Exchanges Get Off to Slow Start

By Maria Valdez Haubrich

For small business owners—especially sole proprietors, freelancers or people with ongoing health issues—one aspect of the sweeping health insurance reform legislation passed in 2010 was very promising: The bill called for states to create health insurance exchanges that would make it easier for people who traditionally have a hard time getting insurance coverage to purchase it.

Slated to be implemented January 1, 2014, the American Health Benefit Exchanges and Small Business Health Options Program (SHOP) Exchanges would be administered by a governmental agency or nonprofit organization and would allow individuals and small businesses with up to 100 employees to purchase qualified coverage. For many small business owners who have trouble obtaining affordable coverage for themselves or their employees, this is good news. However, states will have to create these exchanges themselves, and there’s the bad news.

HealthWatch blog recently reported that states have been lagging behind in establishing SHOP exchanges. If states don’t set up their own exchanges in time, the federal government will take over and set up exchanges for them. So far, governors of only 10 states have signed legislation establishing SHOP exchanges. Some governors who are politically opposed to health insurance reform have purposely delayed the move, such as Florida Governor Rick Scott.

While 2014 sounds like it’s coming up soon enough, states will have to face the music in  2013. That’s when the Department of Health and Human Services (HHS) will evaluate the progress each state has made in setting up an insurance exchange and assess where the federal government may need to step in to get things moving.

Further slowing the progress, preliminary rules for setting up exchanges were just released last week, Kaiser Health News reports; final rules won’t be released until later this year after industry groups, consumer advocates and others have had an opportunity to comment.

Obviously, even states in which politicians don’t agree with the central tenets of health care reform want to keep control of their exchange creation. And HHS, too, would prefer that the power over creating exchanges rest with the states.

Creating exchanges is politically charged. Health insurance companies want states to have lots of flexibility in how they design their exchanges, and want to have a seat on the oversight boards. In contrast, consumer groups don’t want to see insurers on the boards unless they can pass strict conflict-of-interest tests. Also undecided is whether the federal government will ask states to select the insurers that can participate in the exchange (and negotiate prices and other issues with those insurers) or whether exchanges will have a more flexible structure, where any insurance company that meets minimum standards set by the law can participate.

What will happen in the coming year? It remains to be seen, but if you are interested in another option for purchasing small business insurance, you may want to find out what’s going on in your state, and if things aren’t moving fast enough, let your state legislators know how you feel.

Image by Flickr user Mykl Roventine (Creative Commons)

This entry was posted on Thursday, July 21st, 2011 at 6:00 am and is filed under Business Law, Compliance, Small Business, small business, Workforce. You can follow any responses to this entry through the RSS 2.0 feed.


You can leave a response, or trackback from your own site.