Injecting a rare shot of
bipartisanship in the nation's contentious health care overhaul, the
Obama administration Thursday cleared four Republican-led states to
build their own consumer-friendly insurance markets.
With open enrollment
for millions of uninsured Americans just nine months away - Oct. 1,
2013 - the four GOP-led states became part of a group totaling 17 states
plus Washington, D.C., that have gotten an initial go-ahead to build
and run insurance exchanges. Seven were approved Thursday.
Significantly,
the list also included California, which has nearly 7.5 million
uninsured residents, more than any other state.
Democratic-led
California was an early supporter of President Barack Obama's health
care law and had been working diligently on its plan.
Insurance exchanges are not something consumers are familiar with.
"Most
people don't really know what those words mean, but that's OK," said
Rachel Klein, executive director of Enroll America, a nonprofit trying
to educate the public about new benefits under the federal health care
law. "What they really need to know is that there's going to be a new
way to buy health insurance."
The new marketplaces are supposed to
take the confusion and anxiety out of buying private health insurance
for individuals and families who buy their coverage directly. Exchanges
are meant to have the feel of an online travel site, an Expedia or
Orbitz.
Exchanges will also offer some relief from sticker shock.
Under the new law, about 8 in 10 customers in the new marketplaces will
be eligible for income-based federal aid to help pay their premiums.
Small businesses will have separate access to their own exchanges.
The
approvals announced Thursday are provisional; administration officials
said more work remains to be done before they'll issue final sign-offs.
The GOP-led states conditionally approved are Idaho, Nevada, New Mexico,
and Utah. Idaho and Utah have Republican governors and legislatures.
Nevada and New Mexico have GOP governors, but Democrats control their
legislatures.
"We're on track for Idaho having a say over how this
process works, instead of having the federal government dictate all of
it," said Jon Hanian, spokesman for Republican Gov. C.L. "Butch" Otter.
The legislature still has to weigh in.
A fifth Republican-led
state, Mississippi, may yet win approval. However, the administration's
decision is complicated by a legal dispute between Republican state
officials. The governor does not want to participate, while the
insurance commissioner does.
The federal government will set up
and run the new marketplaces in states that opt out of playing any role,
and 19 Republican-led states have taken that route.
The rest of the states are either pursuing partnerships with Washington or still mulling their options.
Two
states, Arkansas and Delaware, have been approved for partnerships.
That means a state will handle consumer issues and oversee health plans
while Washington takes on the back-office tasks of enrolling consumers
and determining subsidies.
Right now, exchanges exist in only a couple of states, although some large private employers are also experimenting with them.
Originally
a Republican idea, exchanges then won bipartisan support, only to be
abandoned by many in the GOP once they were incorporated into Obama's
health care law.
The basic concept is that setting up a
marketplace with clear-cut rules would benefit consumers and encourage
insurance companies to compete, helping keep costs in check. Former
Massachusetts Gov. Mitt Romney set up an exchange in that state under
his 2006 health care overhaul law. And Utah has already launched one
that caters to small businesses.
Under Obama's law, plans in the
new marketplaces will have to cover a set of "essential" benefits,
including hospitalization, doctor visits, prescriptions, prevention and
care for pregnant women and young children. Cost to the consumer will be
the main difference among plans, with four levels of coverage: bronze,
silver, gold, and platinum. A consumer with a bronze plan will pay lower
monthly premiums, but would face higher cost sharing for medical care.
Exchanges
will also steer low-income people to state Medicaid programs. The law
gives states the option to expand Medicaid to cover more of their
low-income residents, with the federal government picking up about 90
cents of every dollar in added costs.
Coverage through exchange plans will begin on Jan. 1, 2014.
At
the same time, the law will require most Americans to carry health
insurance, either through an employer, a government program, or by
buying their own policies. Insurance companies will be barred from
turning away the sick or charging them more. And insurers will also be
limited in what they can charge older customers.
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