The Roanoke Times reported yesterday that, “Gov. Bob McDonnell's administration will not push legislators to create a state-run health insurance exchange during the 2012 legislative session… The exchange would create a database for individuals and small businesses to shop for insurance coverage. The federal health care law calls for exchanges to be operational by 2013 and for coverage to begin in 2014.”
Virginia Organizing leaders have attended every meeting of the Virginia Health Reform Initiative (VHRI) an advisory council created by Governor McDonnell. Virginia Organizing has been there to encourage the panel to recommend a consumer-friendy Exchange. We were encouraged by most of the recommendations of the VHRI and are dissapointed that the Governor has decided not to move forward with the Exchange.
The Virginia General Assembly will take the next step by doing nothing or by voting on legislation to create a Virginia Health Benefits Exchange. Virginia Organizing recommends the General Assembly folllowing guildines when establishing Exchange legislation.
As part of implementation of the Affordable Care Act (ACA), states must set up and operate a Health Benefit Exchange for consumers and small businesses. Beginning in 2014, these new health insurance marketplaces will be available for individuals and small businesses to access and purchase private health insurance plans, along with systems in place to allow for seamless coordination with Medicaid and FAMIS.
Successfully implemented Exchanges are intended to provide quality, comprehensive and affordable health insurance options to Virginia consumers. Virginia has a number of choices to make in designing its Exchange. The Governor’s Virginia Health Reform Initiative (VHRI) considered many of these issues as part of its work in the spring and summer 2011. Its recommendations were sent to the Governor and legislative leadership on October 1 and released to the full General Assembly and the public on November 29.
The General Assembly must address four key priority areas when implementing Health Benefit Exchange authorizing legislation during the 2012 session: Virginia Organizing strongly supports the following priorities for Virginia’s Health Benefits Exchange:
Issue 1: Foxes Watching the Henhouse? Where to House Exchange
We strongly support the VHRI’s overwhelming rejection of housing the Exchange within the SCC Bureau of Insurance. The Bureau is a regulatory agency overseeing health insurance plans in Virginia. Adding more mandates to operate a new health insurance purchasing pool and a consumer oriented marketplace would entail huge new responsibilities that would conflict with existing licensure and regulatory functions of the Bureau.
Additionally, housing an Exchange within the Bureau of Insurance would ultimately place all governing powers with just three SCC Commissioners (who already must regulate a wide range of industries) instead of a distinct Exchange board that represents many stakeholders and operates in a public and transparent way.
We feel that the Exchange Board should be structured as a quasi-governmental agency with Board members appointed by the Governor. We strongly support the VHRI’s overwhelming rejection of housing the Exchange within the SCC Bureau of Insurance.
Issue 2: Who Makes the Rules? Establishing A Governance Board
We strongly agree with the VHRI recommendation to use the Virginia Housing and Development Authority as a model for a governance board. The General Assembly should build on the VHRI recommendations by establishing a board with strong consumer representation.
The Board should include:
Ø At least two small business representatives
Ø Two consumer representatives (with expertise in public health insurance programs and the needs of low income, disabled, and uninsured populations.)
Ø Consumer and other health policy experts should comprise a majority of the governance board. All board members should have expertise in one or more of the following areas: consumer protection, individual health care coverage, small employer health care coverage, health benefits plan administration, health care financing and actuarial science.
Ø We strongly urge that individuals with a direct financial conflict-of-interest be prohibited from serving on the governance board. The goals of the Exchange to provide affordable health coverage cannot be achieved if Exchange board members have a financial interest in higher health insurance premiums.
Issue #3: Exchange Flexibility
We disagree with the VHRI recommendation preventing the governance board from actively managing the Exchange. It is absolutely essential for the Exchange Governing Board to have the discretion and authority to set strong requirements for plan participation, including quality of care, network adequacy and costs. The Board should be allowed to react to market conditions when appropriate to ensure that the Exchange provides quality and affordable coverage for the Virginia consumer.
Issue #4: Insurers Cherry Picking the Healthy? Reducing Adverse Selection
The VHRI recommended that Virginia establish the same market rules and include the same benefits mandates whether health insurance is sold inside or outside the Exchange. It is critical that the Virginia Exchange does not create an adverse selection problem. Insurance works when healthier low-cost individuals help balance the cost of less healthy enrollees. Without this, health insurance rates rise and become unaffordable. An Exchange that allows insurers to cherry pick the healthier risk in less comprehensive plans outside the Exchange will hurt the Exchange and erode public confidence and support.
***Exchange recommendations based on the Commonwealth Institute and Virginia Poverty Law Center's Creating a Consumer Friendly Exchange Factsheet.