AnAnalysisofState‐BasedHealthInsuranceExchangeProposalsAfterthePassageoftheAffordableCareActCharlesGreenberg,JDMPHCandidateCapstoneAdvisor:BradHerring,PhD

i

ExecutiveSummary ThepassageoftheAffordableCareActonMarch23,2010wasmarkedwith,dependingonyouropinion,fanfareorderision.TheACAaccomplishesmanygoalsincludingareorganizationoftheinsurancemarketsandamandatethatallU.S.citizensmaintainhealthinsurance.OneofthemethodsbywhichtheActattemptstoaccomplishthesefeatsisthroughthecreationofstate‐basedhealthinsuranceexchanges. Stateshavetheoptiontocreateandgoverntheirownexchangeortheymayelecttohavethefederalgovernmentoperateoneintheirstead.WhilethereareimportantACA‐basedrequirementsontheexchanges,statesstillhaveagreatdealofflexibilityintheircreation.Thisflexibilityincludesaspectsrelatedtotheexchange’sgovernanceanddesign,suchastheabilitytorequirebenefitsbeyondthosemandatedbytheACA,andthechoiceofawide‐openoramoreclosedmarketplace.Thispaperdocumentsthestatus,asofMay1,2011,ofstatelegislativeproposalscreatinghealthinsuranceexchanges.Itbothidentifieswhereeachstateisinthelegislativeprocessandexaminesdifferentfacetsofthelegislationrelatedtogovernanceandexchange/insurancedesign. Tothispoint,stateadoptionofhealthinsuranceexchangesisanemic,asonlysixstateshaveenactedlegislationcreatingthestructureofanexchangeorthelegalauthoritytocreatesuchanexchange.Currently,athirdofallstateshavenolegislativeactivitythatwouldcreateanexchange.TrackingthesedevelopmentsisimportantbecauseonJanuary1,2013stateswillbejudgedbytheDepartmentofHealthandHumanServicesasbeingreadyornottooperateanexchange.Ifastateisdeemedunready,thefederalgovernmentwilloperatetheexchangeinplaceofthestate. Thereisagreatdealofvariationacrossthestate’slegislativeproposalswithrespecttothesegovernanceanddesignaspects.Theformofexchangebeingpursuedbystatesvariesbetweengovernmental,nonprofit,andaquasi‐publicformandisroughlysplitevenlybetweenthethree.Thevastmajorityofexchangeboardsofdirectorshaveregulatoryauthoritybutthereisvariationintermsofinsurancecompanyrepresentationontheboards.

Moststateshavenotchosentocreaterestrictionsontheminimumormaximumnumberofplansaninsurancecarriermayoffer.NorhavestatesexplicitlygrantedadditionalbenefitsorrestrictedbenefitstothoseenumeratedintheACA.Abouthalfofthestatesarepursuingabortioncoveragerestrictionsyetmanyofthesestatesdonothaveactivelegislativeproposalscreatinganexchange.

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I.Introduction

InMarchof2010,theUnitedStatesgovernmentpassedthemostimportant

healthcarelegislationinageneration,theAffordableCareAct.1TheACAhasa

multitudeofrequirementsthatchangethelandscapeofhealthcareforthewhole

country.Therearenewgovernmentprograms,adjustmentstoalreadyexisting

programs,newrulesforinsurers,andnewoptionsforstates‐mostofwhichwere

createdinanattempttoeliminatethenumberofuninsuredindividualsinthe

countryorreducethegrowthinhealthcarespending.

However,oneofthemaincriticismsleveledagainsttheACAisthealleged

overreachofthefederalgovernmentintothedomainofthestates.Traditionally,

regulationofhealthinsurancehasbeenastateissue.Onecompromisemadeinan

attempttoallayconcernsaboutfederaloverreachallowedstatestoimplementone

ofthekeyprovisionsoftheACA:healthinsuranceexchanges.Theseexchangeswill

benewmarketplacesforhealthinsurancecoverageintheindividualandsmall

groupmarketsandareconsideredtobecentraltothesuccessorfailureoftheACA

asawhole.Giventhehighstakesandcontroversyinvolved,theactivityinthestates

inregardtotheseexchangesmustbefollowed.TheU.S.DepartmentofHealthand

HumanServicesisrequiredtodetermineastateexchange’sfeasibilitybyJanuary1,

2013.Thus,itisimperativethatstatesnotdawdleincreatingtheexchanges.

Thispaperexaminesthevariousproposalscurrentlycirculatinginthestates.

First,thispaperexaminestheactivityinthestatesregardingthedecisiontocreate

thehealthinsuranceexchangesor,alternatively,toallowthefederalgovernmentto

insteadoperatetheexchanges.Second,thispaperexaminesthevariouslegislative

2

proposalsfordifferentkeyaspectsofgovernanceincluding:formofexchangeentity,

regulatoryauthority,andinsurancerepresentationontheboardofdirectors.Third,

thispaperreviewsdifferencesinexchangeandinsurancedesignparameters

including:maximumorminimumnumberofplans,allowanceofextrabenefit

mandates,andtheabortionopt‐out.

II.HealthInsuranceExchangesandtheACA

AsimaginedthroughtheACA,eachstatewillcreateanAmericanHealth

BenefitExchangethatactsasamarketplaceforthosetryingtofindhealthcare

coverage.2Infact,statesarerequiredtoallowtwodifferentgroupsintothe

exchangeattheoutset:individualsandsmallbusinesses.Stateshavetheoptionof

creatingtwoseparateexchanges,onededicatedtoeachofthosetwomarkets,or

statescancombinethetwointoasingleexchange.3Thosewithoutemployer

sponsoredcoverageandthosewhodonotqualifyforMedicaidorMedicarehavethe

optionofutilizingtheexchangeorpurchasingcoverageelsewhere.UndertheACA,

individualswillreceiveataxcredittoputtowardspremiumsforqualifiedhealth

plansofferedonthehealthinsuranceexchangeiftheindividualisbetween133%

and400%ofthefederalpovertylevel(FPL).4Likewise,smallbusinesses

(businesseswith25orfewerfulltimeemployees)willreceivepremiumtaxcredits

forqualifiedhealthplansintheexchange.5

TheCongressionalBudgetOfficeestimatesthat24millionindividualswill

purchaseinsurancethroughtheexchanges.6Recently,theKaiserFamilyFoundation

estimatedthatofthose24million,65%wouldtransitionfromuninsuredstatusto

3

anexchange‐basedhealthplan.7Thus,accordingtotheseestimates,15.6million

formerlyuninsuredindividualswouldfindinsurancethroughtheexchanges.

Twostates,MassachusettsandUtah,hadexchangesinservicepriortothe

passageoftheACA,buttheyarepopularlyviewedasapproachingtheprograms

differently.8Massachusetts,aspartofitshealthcareoverhaulin2006,createdthe

HealthConnectorasitsexchange.9TheConnectornegotiateswithinsurancecarriers

astowhichplanswillbeoffered.Bycontrast,theUtahHealthExchange,whilestill

determiningminimumbenefitstobeoffered,allowsanycarriertoenterthemarket

atanypricetheychoose.10Thetwostatesareviewedasrepresentingtheopposite

endsofthespectruminformulatingexchangesinthatoneattemptstoprotect

consumersbybehavingasanactivepurchaserinamarketwhiletheotherallows

theconsumerstochoosefreely.

Therearebothexplicitrestrictionsonflexibilityandgrantsofflexibility

providedtothestatesintheACA.TheActiswrittensothatstateshavetheoptionto

implementtheirownexchangeslikeMassachusetts,Utah,orindifferentwaysfrom

eitherstate.Thefollowingsectionswillexaminekeyrestrictionsandpolicychoices

statesfaceinconstructinganexchange.

II.A.RestrictionsonStatesCreatingHealthInsuranceExchanges

TheACAplacescertainminimumrequirementsonstatesinthecreationand

operationoftheexchanges.Firstandforemost,theplansofferedintheexchanges

mustbe“qualifiedhealthplans”(QHP).11AQHPisdefinedasahealthplanthatis

certifiedbytheexchange,offeredbyahealthinsuranceissuerthatmeetscertain

requirements,andprovidestheessentialhealthbenefitspackage.12Theessential

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healthbenefitspackageisasetofbenefitsthatmustbeofferedineveryplan,such

asemergencyservices,hospitalizations,andprescriptiondrugs.13Onlywhenthe

regulationsmeanttoilluminatethecontoursoftherequiredminimumbenefitsare

releasedwillstateexchangesknowtheexactbenefitsthatmustbeofferedbyQHPs.

Thesefederallymandatedhealthbenefitminimumshavecausedagooddealof

consternationasopponentschargetheycouldleadtomoreexpensiveplansthat

consumersmightnotwant.

Theessentialhealthbenefitspackagecontainsamultitudeofother

restrictionsthatstatesmusthonor.Thepackagemustincludelimitsoncost

sharing.14Also,thepackagemustprovideoneofbronze,silver,gold,orplatinum

levelsofcoverage.15Thedifferentlevelssignifydifferinglevelsofcoverage

“designedtoprovidebenefitsthatareactuariallyequivalentto”60%to90%“ofthe

fullactuarialvalueofthebenefits.”However,ifaplanisacatastrophicplan,itcan

onlybeofferedintheindividualmarketandmustberestrictedtoacertainsubsetof

qualifiedindividuals.16ThedemandthatonlyQHPsbeofferedonthestate

exchangesisthemainfederalrequirementaffectingconsumerchoicewithinthe

exchanges.

II.B.StateFlexibilityinCreationandRegulationofHealthInsuranceExchanges

Althoughthereareimportantrequirementsonthestate‐basedexchanges,

Congressgrantedstatesagreatdealoflatitudeintheimplementationandoperation

ofthesenewentities.Thefirst,andmostimportant,choicestatesmustmakeis

whetherornottoelecttohavetheirownexchange.ByJanuary1,2013,shoulda

stateelectnottohaveanexchange,oriftheSecretaryofHealthandHumanServices

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determinesthatanexchangewillnotbeoperationalbyJanuary1,2014,thefederal

governmentwilloperateanexchangeinthestate.17Thus,statesthatditherin

creatingtheexchangemightlosetheultimateauthoritytocraftanexchangeasthey

wouldlike.

Whilethequalityandlevelofhealthbenefitstoindividualsandsmall

businessesintheexchangeispartiallydeterminedbybenefitmandatesintheACA,

statescangobeyondthosemandates.Forexample,federallawallowsastateto

mandateQHPstoofferbenefitsbeyondthoserequiredintheminimumbenefits

packagediscussedintheprevioussection.18However,anystatethatchoosesto

requireagreaterbenefitspackagemustassumetheincrementalcostsofthe

premiumsubsidyassociatedwiththosegreaterbenefits.19Anotherexampleofstate

flexibilityisthatthereisnofederallymandatedminimumormaximumnumberof

plansthatacarriermustofferontheexchanges.Thequality,choice,andcostof

healthplansavailabletoconsumerswouldvarydramaticallybetweenstates

dependingonhowanexchangeimplementssuchrestrictions.

Whetherornotastatechoosestoimplementcertainexchangeandinsurance

designparameterswillbedeterminedbytwoentities.Attheoutset,states

themselvesmustcreatetheformoftheexchangesandtherestrictionsunderwhich

theexchangesmustoperate.Thisislargelydeterminedthroughthelegislative

processthoughcertainstatesareoperatingunderthebeliefthatalreadyexisting

entitieshavethelegalauthoritytocreateexchanges.Oncetheexchangeisformed

andoperational,theentityinchargeofgoverningtheexchangewillhavemostofthe

authorityinmakingsuchdecisions.Thus,thestricturesplacedontheexchangesby

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thelegislaturesandthegoverningstructureoftheexchangesarethelogicalstarting

pointsinexaminingtheflexibilitystateswillgiveexchanges.

Basedonthisdiscussion,thefollowingsixfactorsmayormaynotbe

addressedinstatelegislationcreatingexchangesbuttheyareallimportantin

determiningtheflexibilitygiventotheexchanges:

1. Governance:

A. Statesmaychoosetheformoftheexchangeeitherasagovernmentagency,non‐profitentity,orsomecombinationofthetwo.20

B. Theboardofdirectorsfortheexchangemayormaynothave

regulatoryauthority.

C. Theboardofdirectorsfortheseveralexchangesmayormaynotcontainrepresentativesoftheinsuranceindustry.

2. ExchangeandInsuranceDesignParameters:

D. Legislativelimitsonthenumberofhealthplansacarriermay

offer.

E. Variouslegislativelimitsontheserviceshealthplansmustoffer.

F. Theabilityofhealthplansintheexchangetoofferabortioncoveragetoindividualsreceivingfederallysubsidizedpremiumsupport.

Ofcourse,thesepolicychoicesareonlyrelevantifastateelectstocreateitsown

healthinsuranceexchange.Theremainderofthispapersummarizesa

comprehensivesearchoftherelevantlegislativeproposalsandcharacterizesthem

by1)stateandlocationintheparticularstates’legislativeprocess,2)governance,

and3)exchangeandinsurancedesignparameters.

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III.Methods

Thereweremultiplemethodsbywhichthisdatawascollected.Intotal,53

separatewebsitewereregularlyutilizedtogatherthenecessaryinformation.Allof

thesefollowingwebsiteswerenecessary,asnosinglesourcewouldoffercomplete

informationastowhichstatesactuallyputforwardhealthinsuranceexchange

legislation.First,theNationalCouncilofStateLegislaturestracksexchangerelated

legislationinallofthestates.However,thetrackingsystemdoesnotinterpretthe

individualpiecesoflegislationandsometimesincludeslegislationthatdoesnotfit

theparametersofthisreview.Second,keywordsearcheswereconductedonthe

Lexis/NexisStateCapitolsearchengine.Keywordsincluded:healthinsurance

exchange,insuranceexchange,exchange,connector,andabortion.Third,adaily

GoogleNewsAlertwascreatedtosearchforallinstancesoftheterm“health

insuranceexchange.”Fourth,all50statelegislativewebsitesweresearchedwiththe

samekeywordslistedforLexis/Nexis.Thefollowingthreesectionspresentthe

cumulativeresultsfromtheseinternet‐basedsearches,asofMay1,2011.

IV.ResultsforWhetherStatesAreActivelyPursuingExchanges

GiventhatbyJanuary1,2013,HHSmustdetermineifanexchangewillbe

operationalinastatebythe2014startdate,statesmustmovequicklytocreatethe

legalstructureoftheexchanges.Timepressurecouldbemoreacutedependingona

particularstate’slegislativesystem.Forexample,theStateofTexasutilizesabi‐

annuallegislaturethatmeetsfor140daysinoddyears.21Thus,absentaspecial

sessioncalledbytheGovernor,2011isthelastopportunityforTexastopassalaw

creatingitsownstate‐runexchange,therebynecessitatingafederally‐runexchange.

8

Infact,anauthorofoneofTexas’exchangeproposalsfearsthatafederally‐run

exchangeisinevitableastheGovernorhasapparentlyshownlittleinterestin

creatingorapprovingthecreationofanexchange.22

Texasisnottheonlystatethatcouldfailtoelecttooperateanexchangeby

thenecessarypoint.Montana,Nevada,andNorthDakotaalsoconvenebiennial

regularsessionsandthesesessionsonlymeetinodd‐numberedyears.23Thus,just

likeTexas,thesestateswillnothavetheoptionoflegislativelycreatingastate‐based

exchangeabsentaspecialsessioncalledaccordingtotheirrespectivestate

constitutions.

Somestatesareactivelypursuingexchangeswhileothersarenot,andstill

othersalreadyhavelawscreatingexchangesinplace.Forpurposesofthisreview,

statesareconsideredtobe“activelypursuing”anexchangeifalegislativeproposal

iscurrentlybeingconsideredinacurrentlegislativesession,orhascompletedthe

legislativeprocessandisapprovedbythestate’sGovernor.Foraproposaltobe

consideredcurrent,theremustnothavebeenafinalmajorityvoteagainstit,the

proposal’ssponsorshipnothavebeenwithdrawn,norshouldithavebeenvetoed.If

anyoftheseeventsoccur,thebillisconsidered“inactive.”Ifaninactivebillwasthe

onlyonebeingpursuedbythestate,thenthisreviewdoesnotconsiderthatstateto

beactivelypursuingthecreationofanexchange.Additionally,ifalegislativebody

haspassedonebillandsentitforapprovaltotheGovernor,anyotherbillcreating

anexchangethathasnotbeenofficiallyvoteddownisconsideredinactive.Lastly,

billssimplycallingforastatetoexaminethepossibilityofcreatinganexchangeare

notconsideredactivebecausethelegislativeintenttoactuallycreateanexchangeis

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notpresent,onlytheintenttostudythepossibilityofcreatinganexchangeis

present(Wyoming,forexample).24

Atthispoint,itisimportanttoexplainwhatthisreviewdoesnotattempt.

Thisreviewdoesnottakeintoaccountattemptstocreateanexchangeoutsideofthe

legislativeprocess.Somestateshave,orbelievetheyhave,theauthoritytocreate

exchangeswithoutanyactionbythelegislature.Forexample,eventhoughAlaskais

consideringexchangelegislation,certainstateofficialshavestatedthatthe

legislationisunnecessarytocreateanexchange.25Also,Indianahasissuedan

executiveordercommandingstateofficialstomeettodeterminethestructureand

operationsoftheexchange.26

Currently,24statesareactivelypursuingthecreationofanexchangewhile

sixstateshavealreadypassedthenecessarylegislation.Asstatedpreviously,

MassachusettsandUtahhadexchangesinplacepriortothepassageoftheACA.

SincethepassageoftheACA,thefollowingstateshavepassedlegislationcreatingan

exchange:California27,28(9/30/2010),WestVirginia29(3/12/2011),andMaryland30

(4/12/2011).Virginia(4/6/2011)enactedlegislationthatestablishesthatthestate

willcreateanexchange,however,itdoesnotcontainanyotherspecifications

concerningtheexchange.31

Someofthestatesactivelypursuingexchangeshavemultipleactive

proposals.However,20states,orjustoverathirdofthestates,arenotactively

pursuingthecreationofexchangesatthetimeofpublication.Somestateswereonce

activebutarenowinactiveforavarietyofreasons.Georgiahadbeenactivebuthas

sinceseenitsloneexchangeproposalwithdrawnfromconsiderationandits

10

legislaturehassinceadjourned.32Arizona33,34,Arkansas35,36,Indiana37,

Mississippi38,39,40,41,andMontana42,43hadmultiplelegislativeproposalsbuttheir

legislativesessionsadjournedwithoutpassageandnoneofthestateshave

carryover.NewMexicosucceededinpassinginsuranceexchangelegislationbutthe

governorvetoedit.44Figure1isamapindicatingwhetherornotastateisactive,

inactive,orhasenactedahealthinsuranceexchange.

Figure1Mapshowingstateswithenactedexchangelegislation(darkblue),activeandpendinglegislation(lightblue),completeinactivity(white),andinactivityafterfailedlegislativeattempts(orange).

The24statesactivelypursuinglegislationhaveproposalsatvariousstages

inthelegislativeprocess.Apluralityofthestateshasactivelegislation(14)thatis

currentlyincommittee.Fourstatelegislatureshaveapprovedexchangesinboth

halvesoftheirrespectivelegislatures(Hawaii45,NorthDakota46,Vermont47,and

Washington48),buttheirgovernorshavenotsignedthesebillsintolaw.Sixother

proposalshavebeenfavorablyvotedoninonehalfofbicamerallegislaturesand

senttotheircounterparts:Colorado49,Illinois50,Missouri51,Oklahoma52,Oregon53,

11

andRhodeIsland54.Figure2showsthenumberofstatesineachstageoflegislative

activity.

Figure2Extenttowhichexchangelegislativeproposalshaveprogressed.

V.ResultsforGovernance

AsofMay1,2011,thereareatotalof53legislativeproposalsacrossthe24

statesactivelypursuinglegislation,andsixstateswithlegislationenacted.Each

pieceoflegislationamongthese30statesisdifferentinmultiplerespects,including

governanceofthefuturehealthinsuranceexchanges.Theaspectsaffectingthe

governanceoftheexchangesreviewedhereareformofexchange,regulatory

authority,andthepresenceofinsurancerepresentationontheboardofdirectors.

Thefollowingsetofresultsshiftfromsummarizingthestatusofthe30different

states(i.e.,sixstateswithenactedlegislationand24statesactivelypursuing

legislation)tothestatusofthe53differentproposalsacrossthese30states.Some

statesonlyhaveoneproposal,whileotherstateshavemultipleproposals.

V.A.FormsofHealthInsuranceExchanges

Thereisagreatdealofvariationamongtheactivelegislativeproposals

regardingtheformoftheexchanges.Fifteenactivebillswouldestablishthestate

6

20 14

6

4

24

Enacted

NoActivity

InCommittee

PassedOneHouse

PassedinBothHouses

12

exchangeasagovernmentalagencyorasanarmofanalreadyexistingagency.Ten

activesbillswouldestablishtheexchangeasanonprofitentity.Sixteenstatesdonot

specifytheformofexchangeentity.However,oftheunspecifiedcategory,sixofthe

proposalsoriginateinTexasandfourotherssimplyelecttocreateanexchange

whilenotlegislativelycreatinganyotherexchangecharacteristics.

However,12separateproposalsoptforaquasi‐publicapproach.Thisthird

categoryisdifficulttodefine.Essentially,theexchangewouldbeestablishedwith

bothgovernmentalandprivateelements.Forexample,inConnecticut,thestatutory

definitionof“quasi‐public”isonlyalistofentitiessetupwithoutanyfurther

explanation.55Alegislativereport,however,listscertainkeycharacteristicsabout

quasi‐publicagenciesinConnecticut.56Theseagenciesoperateoutsidethenormal

stategovernmentstructure,thusexemptingthemfromcertainpersonneland

spendingcontrolstypicallyrequiredofExecutiveagencies.Additionally,thereare

noLegislativeorExecutivecontrolsoverthequasi‐publicagency’sbudget.

Theoretically,thisallowsaquasi‐publicagencytorespondtobothproblemsand

opportunitiesmorequicklythanatraditionalgovernmentagency.However,quasi‐

publicagenciesmuststillcomplywith“goodgovernment”lawssuchasfreedomof

informationandethicslaws.Suchadescriptioncanbegeneralizedtoadditional

quasi‐publicorpublic/privatepartnershipformationswhendiscussingthestate‐

basedhealthinsuranceexchanges.Agoodnumberoflegislatureshavemadethe

policychoicetogranttheexchangesmoreoperatingflexibilitysothattheexchanges

couldactmoreasaprivateentitywhilemaintainingthepubliccharacterstates

13

requireofgovernmentagencies.Figure3showsthenumberofactiveproposals

witheachformofgoverningstructure

Figure3Distributionofformsofexchangesinactivelegislation.

V.B.VariationintheBoardsofDirectors

Anintegralpartoftheestablishmentofanexchangeistheestablishmentofa

boardofdirectorstooverseeitsimplementationandoperation.Twofacetsofthe

boardcouldaffecttheformsofthehealthplansultimatelyofferedontheexchange:

1)whetherornottheboardhasregulatoryauthorityand2)allowing

representativesofinsurancecompaniesontotheboards.

Americanpoliticalinstitutionsfollowatypicalflowofgrantsofauthority.

Theauthorityforstategovernmentsflowsfromastateconstitutionthatcreatesthe

branchesofaparticulargovernment.Oneofthebranchescreated,thelegislative

branch,canwritelawsthataffectthecitizenry.Whenthelegislaturecreatesnew

entities,suchasahealthinsuranceexchange,thelegislaturecangrantthatnew

entitytheauthoritytowriteregulationsthataffecttheconductofitsbusiness.Inthe

caseoftheexchanges,anexchangewithregulatoryauthoritymight,forexample,

havetheabilitytodeterminethatcertainaddedhealthbenefitsmustbeincludedin

15

1012

16 Government

Non‐prohit

Quasi‐Public

NotSpecihied

14

ahealthplanbeyondthatwhichisprovidedforintheACA.Absentsuchalegislative

grantofregulatoryauthority,however,theexchangecouldnotundertakesuchan

action.

Alargemajority(41)ofthe53legislativeproposalsacrossthese30states

containregulatoryauthorityfortheexchangeboardofdirectorswhileonlyone

activeproposal,ColoradoSB11‐20057,specificallywithholdsagrantofregulatory

authority.Twostates,Texas58andNorthCarolina59,haveactivepiecesoflegislation

thatdonotvestregulatoryauthoritywiththeboarditselfbutoneoftheboard

membershassuchauthority.Sevenproposalsdonotspecifywhetherornotthe

exchangeboardhasregulatoryauthority.UtahandVermontdonotappeartoutilize

boardsofdirectorsintheirsystems.

TheACAdoesnotcontainrequirementsonthemakeupofboardsof

directors,thusstateshavemaximumflexibilityinmakingsuchdeterminations.

Inclusionofrepresentativesfrominsurancecompaniesonexchangeboardsbreaks

downintothreecategoriesdependingonwhichlegislativeproposalonereads.

Twenty‐twoofthe53proposalscompletelyforbidindividualswithinsurance

carrieraffiliationsfromparticipatingonexchangeboards.Twentyofthe53

proposalsdonotincludeanylanguagerequiringnorprohibitinginsurancecarrier

representation.Nineofthe53proposalsrequirerepresentativesofcarriersto

participateontheboard.iSixofthenineproposalsthatrequireinsurancecarrier

iSouthCarolinaproposalH.3738isinconsistentonthisoneissue.Atonepointthebillrequiresthatthreemembersoftheboardrepresentthehealthinsuranceindustry.Butinthesamesectionthebillstatesthatnoindividualcanbeappointedtotheboardiftheyare“employedby,aconsultantto,ontheboardof,oralobbyistorotherrepresentativeforanentityinthebusinessof,orpotentiallyinthe

15

representationrequiremorethanonesuchrepresentative.Again,Utahand

Vermontdonotutilizeboardsofdirectorsandarenotconsideredinthispartofthe

analysis.Figure4showsthenumberofactiveproposalsineachofthethree

categoriesdescribedabove.

Figure4Distributionofinsurancecompanyrepresentationonexchangeboardsofdirectorsamongthevariousstateproposals.

VI.ResultsforExchangeandInsuranceDesignParameters

Beyondthegovernancestructureoftheexchanges,legislaturesmaychoose

tograntorrestrictthespecificpowersoftheexchangeorlimitthetypeofhealth

plansoffered.

VI.A.LimitsontheNumberofQHPsOfferedbyaCarrier

Eightproposalsacrossfivestateshaveprovisionsexpresslyaffectingthe

numberofhealthplansaninsurancecarriermayofferontheexchange.California60

andtwoofNewJersey’sproposals61,62requirecarrierstoofferatleastoneQHPin

eachofthefivelevelsofcoverage(bronze,etc.)asaconditionofparticipationinthe

exchange.Fiveotherbillsallowfororrequirealimitonthenumberofplansa

carriercanofferineachlevelofcoverage.

businessof,sellingproductsorservicesofsignificantvaluetotheexchange…includ[ing]insurancecarriers.”

9

22

20

RequireInsuranceReps.OnBoard

ForbidInsuranceReps.OnBoard

DoesNotRequirenorProhibitInsuranceReps.

16

VI.B.LimitingtheAbilitytoExceedtheMinimumCoverageandCertification

StandardsoftheACA

Onlyoneactivelegislativeproposalcontainsexplicitrestrictionsonthe

abilityofexchangestogobeyondtheACA.TexasH.B.63663specificallyforbidsthe

exchangefromrequiringprospectivehealthplanstomeetstandardsbeyondthose

establishedbytheACAandrelatedfederalregulations.ThreeofIowa’sproposals

directtheexchangetorequestafiveyearwaiverfromHHSsothatitmayoffer

healthplanswithoutthebenefitmandatesintheACA.64,65,66

VI.C.StatesOptingOutofAbortionCoverage

Oneofthemorecontroversialaspectsofthehealthcarereformdebateswas

coverageforabortions.Abortionopponentsworriedthatwhenindividualsreceiving

premiumassistancefromthefederalgovernmentwouldpurchaseinsuranceonthe

exchangesthatcontainedabortioncoverage,itwouldbeasthoughthefederal

governmentweresubsidizingabortions.Eventually,acompromisewasfound.The

defaultruleisthatQHPswouldbeallowedtoofferabortioncoverageinthe

exchanges,butastatecouldaffirmativelyopt‐outofthatruleandprohibitQHPs

fromofferingabortioncoverage.67Shouldastatenotopt‐outofabortioncoverage,

individualswhochoosetoenrollinaQHPthathasabortioncoveragemustsendtwo

separatepayments:onefortheinsurancecoverageitselfandanotherforthe

abortioncoverage.

Many,butnotmost,statesareactivelypursuingtheabortionopt‐out.Tothis

point,therehavebeenmanylegislativeproposalsfromabouthalfofthestates.

Currently,thereare31activelegislativeproposalsacross23states(SeeFigure5).

17

Ninestateshavepassedopt‐outlegislation:Arizona,Idaho,Louisiana,Mississippi,

Missouri,Oklahoma,Tennessee,Utah,andVirginia.Eightofthestatesactively

pursuinganopt‐outfromabortioncoveragedonothaveactivelegislationcreatinga

state‐basedexchange.Ofthoseninestatesthathaveenactedopt‐outlegislation,five

arenotactivelypursuingexchanges.

Figure5Mapshowingstateswithcompleteabortionopt‐outlegislation(darkgreen),activeandpendinglegislation(lightgreen),andnolegislation(tan).

VII.Conclusion

Althoughstateshaveadeadlinebywhichtheymustdemonstratethe

capabilitytooperatetheirownhealthinsuranceexchange,athirdofallstatesare

notactivelyengagedintheprocessofcreatingsuchexchanges,atleastnot

legislatively.Theformsoftheexchangesarefairlyevenlysplitbetweengovernment,

nonprofit,andquasi‐public.Thereistremendousvariationbetweenthestates

regardingthepresenceofinsurancecompanyrepresentationontheexchange

boardsofdirectorswithapluralityofstatesforbiddingsuchappointments.Ofthe

18

activestates,relativelyfewarelimitingtheabilityoftheexchangestocreate

requirementsbeyondthosestatedintheACA.Suchlimitationscanbemadeby

explicitlyprohibitingtheexchangefromrequiringbenefitsabovethosecreatedby

theessentialhealthbenefitspackageorbyrefusingtogranttheexchangeregulatory

authority.Halfofallstatesarepursuingtheabortionopt‐out,andsomeofthose

statesarenotactivelypursuingexchangelegislation.

StateshaveuntilJanuary1,2013todemonstratetheirexchangeoperational

capabilitiesorrisklosingauthoritytoimplementtheexchangetothefederal

government.Inordertoimplementalloftherequiredregulationsandoperations,

statesmustacceleratetheirlegislativeactivity.

19

Appendix

STATE BILL EXCHANGEFORM

INSURANCEREPRESENTATION

REGULATORYAUTHORITY

MAXIMUM/MINIMUMPLANS

Alabama HB401 NP Require Yes NoRestrictionAlaska SB70 Q/P Require Yes NoRestrictionCalifornia AB

1602/SB900

G Forbid Yes Minimum

Colorado SB11‐200

NP Neither No NoRestriction

Connecticut SB921 Q/P Require Yes NoRestrictionConnecticut HB

6323Q/P Forbid Yes Maximum

Connecticut SB1204 Q/P Forbid Yes MaximumHawaii SB1348 NP Neither Yes NoRestrictionIllinois SB1549 Unspecified Unspecified Unspecified NoRestrictionIllinois HB1577 Unspecified Unspecified Unspecified NoRestrictionIowa SF235 Unspecified Unspecified Unspecified NoRestrictionIowa SF348 NP Forbid Yes NoRestrictionIowa SF391 Unspecified Unspecified Unspecified NoRestrictionIowa HF559 Unspecified Unspecified Unspecified NoRestrictionMaryland HB

166/SB182

Q/P Forbid Yes NoRestriction

Massachusetts MASS

GEN

LAWS

176Q

G Forbid Yes NoRestriction

Minnesota HF497 NP Neither Yes MaximumMinnesota HF1204 G Forbid Yes NoRestrictionMinnesota SF917 G Forbid Yes NoRestrictionMissouri HB609 Q/P Require Yes NoRestrictionNevada SB440 Unspecified Forbid Yes NoRestrictionNewHampshire

SB163 Q/P Require Yes NoRestriction

NewJersey A3733 NP Forbid Yes MinimumNewJersey S2597 NP Forbid Yes MinimumNewJersey S1288 G Forbid Yes NoRestrictionNewJersey A1930 G Forbid Yes NoRestrictionNewJersey S2553 G Forbid Yes NoRestrictionNewJersey A3561 G Forbid Yes NoRestrictionNorthCarolina HB115 NP Require Yes NoRestrictionNorthCarolina HB126 NP Forbid Yes NoRestrictionNorthCarolina SB418 NP Forbid Yes NoRestrictionNorthDakota HB1126 Unspecified Unspecified No NoRestrictionOklahoma HB

2130G Require Yes NoRestriction

Oregon SB99 Q/P Neither Yes MaximumOregon HB3137 Q/P Neither Yes MaximumPennsylvania HB627 Unspecified Neither Yes NoRestriction

20

Pennsylvania SB940 Unspecified Neither Yes NoRestrictionRhodeIsland S87 Q/P Forbid Yes NoRestrictionRhodeIsland H5498 Q/P Forbid Yes NoRestrictionSouthCarolina H3738 G Yes NoRestrictionTexas HB636 Unspecified Neither Yes NoRestrictionTexas SB1510 Unspecified Neither No NoRestrictionTexas SB1586 Unspecified Neither Yes NoRestrictionTexas SB1782 Unspecified Forbid Yes NoRestrictionTexas HB

3402Unspecified Forbid Yes NoRestriction

Texas HB3419

Unspecified Neither Yes NoRestriction

Utah HB133(2008),HB188(2009)

G Neither Yes NoRestriction

Vermont H202 G NoBoard NoBoard NoRestrictionVirginia HB

2434Unspecified Neither Unspecified NoRestriction

Washington SB5445

Q/P Neither Yes NoRestriction

WestVirginia SB408 G Neither Yes NoRestrictionKey:G‐GovernmentAgencyNP‐Non‐ProfitEntityQ/P‐QuasiPublicEntity

21

Notes

1PatientProtectionandAffordableCareActof2010,Pub.L.No.111‐148,124Stat.119.2§1311(b).3§1311(b)(2).4§1401.5§1421.6CBO’sAnalysisoftheMajorHealthCareLegislationEnactedinMarch2010BeforetheHouse

Subcomm.onHealth,Comm.onEnergyandCommerce,112thCong.(2011)(statementofDouglasW.Elmendorf,Director,CongressionalBudgetOffice).

7 A Profile of Health Insurance Exchange Enrollees. (2011). Retrieved March 31, 2011, from http://www.kff.org/healthreform/upload/8147.pdf.

8 Pear, R. (2010). Health Care Overhaul Depends On States ’ Insurance Exchanges. The New York Times, 1-4.

9MASS.GEN.LAWSch.176Q(2010).10 Corlette, S., Alker, J., Touschner, J., & Volk, J. (2011). The Massachusetts and Utah Health Insurance

Exchanges: Lessons Learned. Emerging infectious diseases (Vol. 17, pp. 1-16). Retrieved May 6, 2011, from http://ccf.georgetown.edu/index/cms-filesystem-action?file=ccf publications/health reform/exchanges.pdf.

11ACA§1311(d)(2)(B)(i).12§1301(a).13§1302.14§1302(c).15§1302(d).16§1302(e).17§1321(c).18§1321(d)(3).19§1321(d)(3)(b)(ii).20§1311(d)(1).21TEX.CONST.art.III,§5.22 Ramshaw, E. (2011). Zerwas: Texas Health Insurance Exchange May Be Dead. The Texas Tribune.

Retrieved March 30, 2011, from http://www.texastribune.org/texas-health-resources/health-reform-and-texas/zerwas-texas-health-insurance-exchange-may-be-dead/.

23AnnualversusBiennialLegislativeSessions.NationalConferenceofStateLegislatures.RetrievedApril12,2011,fromhttp://www.ncsl.org/default.aspx?tabid=17541.

24H.B.50,61stLeg.,Gen.Sess.(Wyo.).25 Eshleman, C. (2011). Alaska Senate delves into health care reform. Fairbanks Daily News-Miner.

Retrieved March 31, 2011, from http://newsminer.com/bookmark/12537109-Alaska-Senate-delves-into-health-care-reform.

26Exec.OrderNo.11‐01(Jan.3,2011).27A.B.1602,2010Gen.Assem.,Reg.Sess.(Cal.2010).28S.B.900,2010Gen.Assem.,Reg.Sess.(Cal.2010).29S.B.408,80thLeg.,1stSess.(W.Va.).30H.B.166,2011Gen.Assem.,428thSess.(Md.).31H.B.2434,2011Gen.Assem.,Reg.Sess.(Va.).32H.B.476,2011Gen.Assem.,Reg.Sess.(Ga.).33H.B.2666,50thLeg.,1stReg.Sess.(Az.).34S.B.1524,50thLeg.,1stReg.Sess.(Az.).35H.B.2104,88thGen.Assem.,Reg.Sess.(Ark.).36H.B.2138,88thGen.Assem.,Reg.Sess.(Ark.).37S.B.580,2011Gen.Assem.,1stReg.Sess.(Ind.).38H.B.1336,2011Leg.,Reg.Sess.(Miss.).

22

39S.B.2991,2011Leg.,Reg.Sess.(Miss.).40S.B.2992,2011Leg.,Reg.Sess.(Miss.).41H.B.1220,2011Leg.,Reg.Sess.(Miss.).42H.B.124,62ndLeg,Reg.Sess.(Mont.).43H.B.620,62ndLeg,Reg.Sess.(Mont.).44S.B.38,50thLeg.,1stSess.(N.M.).45H.B.620,62ndLeg,Reg.Sess.(Mont.).46H.B.1126,62ndLeg,Reg.Sess.(N.D.).47H.202,2011‐12Leg,Reg.Sess.(Vt.).48S.B.5445,62ndLeg.,Reg.Sess.(Wash.).49S.B.11‐200,68thGen.Assem.,1stReg.Sess.(Colo.).50H.B.1577,79thGen.Assem.,Reg.Sess.(Ill.).51H.B.609,2011Gen.Assem.,Reg.Sess.(Mo.).52H.B.166,2011Gen.Assem.,428thSess.(Md.).53S.B.99,76thLeg.,Reg.Sess.(Or.).54S.87,2011Leg.,Reg.Sess.(R.I.).55CONN.GEN.STAT.12§1‐120(1)(2011).56Backgrounder:StateHealthAuthorities.OfficeofLegislativeResearch.RetrievedApril15,2011,

fromhttp://www.cga.ct.gov/2008/rpt/2008‐R‐0593.htm.57S.B.11‐200,68thGen.Assem.,1stReg.Sess.(Colo.).58Sec.1509.006,S.B.1510,82ndLeg.,Reg.Sess.(Tex.).59H.B.115,2011Gen.Assem.,Reg.Sess.(N.C.).60Sec.7(e),A.B.1602,2010Gen.Assem.,Reg.Sess.(Cal.2010).61Sec.7(c)(1),A.3733,214thLeg.,Reg.Sess.(N.J.).62Sec.7(c)(1),S.2597,214thLeg.,Reg.Sess.(N.J.).63H.B.636,82ndLeg.,Reg.Sess.(Tex.).64S.F.235,84thGen.Assem.,Reg.Sess.(Iowa.).65S.F.291,84thGen.Assem.,Reg.Sess.(Iowa.).66H.F.559,84thGen.Assem.,Reg.Sess.(Iowa.).67ACA§1303(a)(1).