NSBA Urges HHS to Speed Health Exchange Implementation

September 26, 2012

Earlier this week, NSBA submitted comments to the House Ways and Means Subcommittee on Health urging prompt action on implementing–and providing guidance–on health insurance exchanges, as required by Patient Protection and Affordable Care Act (PPACA). Health insurance exchanges are essentially structured marketplaces where relatively standardized health insurance policies are offered by insurance companies and complete information disclosure is required in a standardized format. PPACA requires that states establish an “American Health Benefit Exchange” that meets approximately 10 criteria.  If they do not, then the federal government will establish a federal health insurance exchange in the state.

Provided that participation in the exchange is voluntary, NSBA supports state level health insurance exchanges as a reasonable step designed to improve the competitiveness of the health insurance market, to increase the information available to health insurance purchasers (whether individual consumers or small businesses) and to constrain health insurance costs.

In his statement, NSBA President Todd McCracken expressed concern “that the implementation of health insurance exchanges is, to date, inadequate for success.”

He went on to say, “Present regulatory guidance leaves open over a hundred significant unanswered questions.  This will hinder the ability of states to implement the exchanges and the willingness and ability of insurers to participate in the exchanges.  Time is running very short.”

States are required to submit a blueprint to the Department of Health and Human Services (HHS) documenting their plan for establishing an Exchange no later than Nov. 16, 2012 for the 2014 plan year. HHS must approve or conditionally approve state-based Exchanges no later than Jan. 1, 2013.  Open enrollment in the exchanges begins on October 1, 2013.

The open issue of the most direct importance to small firms is whether HHS intends for employers offering insurance through Small Business Health Options Programs (SHOPs) to be able to determine what insurance is being offered to their employees and on what terms.  Small businesses should be provided the option to choose which plan or plans they will offer their employees. Retaining this degree of control over their health insurance costs, and the type of insurance offered, is very important to small firms.  If they do not retain effective control over what insurance is offered, fewer small businesses will participate, and the SHOPs are much less likely to succeed whether the SHOP is a federally facilitated SHOP or partnership SHOP. HHS should clarify that small-business participants in the SHOP will be able to choose what insurance is offered to their employees.  This recommendation is consistent with the Final Exchange Rule, which allows exchanges to permit employer choice of one or more Qualified Health Plans (QHPs).  This is the single most important concern of small businesses.

There are, however, a host of other issues that must be resolved for states and insurers to build effective exchanges.  Important open issues include:

  • The criteria for HHS approval of a state exchange, including details for conditional approval;
  • Processes for integrating eligibility systems with the federal data services hub;
  • The transaction standards for enrolling individuals into qualified health plans;
  • The mechanism for coordination of premium payments within mandated premium aggregators;
  • How to determine “affordability” for assessing penalties on employers when individuals receive an exchange subsidy, including whether affordability will be measured for employee dependents;
  • Essential health benefits requirements; and
  • How to determine actuarial value for issuers and states for purposes of determining whether a product complies with the required metallic levels (bronze, silver, gold or platinum).

Without answers to these questions, the exchanges will not function properly.

To read the NSBA Statement to the Ways and Means Committee Health Subcommittee, click here.