Is Wyoming Too Small For an Effective Health Insurance Exchange?

The federal health reform law, the Patient Protection and Affordable Care Act (PPACA)  (P.L. 111-148), requires that all states develop health insurance exchanges by 2014. The exchanges serve as online marketplaces for individuals and small businesses to shop for health insurance, allowing consumers to evaluate and compare various plans that meet minimum benefit standards defined by PPACA. The idea is that health insurance companies will have to be more transparent and the more competitive platform will encourage them to provide consumers with better products. States have until January 1, 2013 to develop a framework for their own exchanges; otherwise, the federal government will implement a default exchange program for them.

There have been concerns raised as to whether an exchange is truly feasible in a state like Wyoming, which boasts the smallest population in the United States with 563,000 people. Bill Landen, a State Senator and member of the Wyoming Health Benefits Exchange Steering Committee, stated, “I have some real reservations about whether or not we could make an insurance exchange self-sustaining…We have an older population. We have a population that works on farms and ranches and oil rigs.”  Nonetheless, the Committee has recommended that Wyoming develop its own exchange in lieu of setting up a regional exchange with neighboring states or defaulting to the government program.

Wyoming desires to maintain its independence and unique ways of doing things. Landen pointed out the difficulties of implementing a regional exchange with other states, which have processes and rules dissimilar to those of Wyoming and may be reluctant to include the state’s small, aging population in their risk pool. As a state largely opposed to federal health care reform, it goes without saying, the idea of allowing the federal government to set up the program is largely unpopular. Like the Committee, Governor Matt Mead opposes federal intervention, stating that Wyoming would “cede substantial authority” over its insurance markets and the Medicaid eligibility process.

Exchange opponents point out that the state’s small risk pool will result in higher costs being passed on to Wyoming consumers compared to other states. Since administration costs are also distributed among enrollees, the smaller number of enrollees may result in higher fees for Wyomingites.

Another issue raised is the tendency of Wyoming residents to seek care in surrounding states due to the lack of physician specialists in the state. Since the state’s small population is spread out over such an expansive geographic region, residents currently may have to drive 70 miles to receive care. It is not uncommon for patients to seek cheaper care in larger cities in neighboring states such as Denver and Salt Lake City. According to Elizabeth Hoy, the health care policy advisor to Governor Mead, “There’s infrastructure that can’t be built in Wyoming because people go out of state…It may be important that whatever product we sell, we sell across state lines.”

Governor Mead has received criticism for embracing the Committee’s recommendation to establish a state exchange program since he has included Wyoming in the 25-state lawsuit seeking to repeal PPACA and its exchange requirement, which will be heard this spring by the United States Supreme Court. Mead defends his position, stating that if PPACA is not repealed, Wyoming is still required by federal law to establish the exchange or face federal interference. He wrote, “For these reasons, I strongly support the committee’s recommendation that Wyoming move forward with establishing some components of a state-run benefits exchange and that these efforts be as transparent as possible.”

On February 15, 2012, a state Senate committee voted to advance a bill to the full Senate that gives the legislature an extension of time to decide whether the state should establish its own exchange.