Senators Express Concerns About New Health Insurance Exchanges/Marketplaces

The Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) was designed to maintain the current system of getting and paying for healthcare in the United States. For most Americans in 2014, health care will still be provided by physicians and other health care practitioners operating in the private sector, and primarily paid for by private insurance companies.

A core part of PPACA was expanding access to health insurance for people who had difficulty qualifying for or affording health insurance. One of the key ways insurance coverage may be opened up for people is through health insurance exchanges to be set up in each state.

The health insurance exchanges have now been re-branded by the Obama administration as “health insurance marketplaces,” in part because there was confusion as to what an exchange really was. In these insurance marketplaces, insurers will offer a variety of health insurance products at a variety of price points, all offering at least a basic amount of health coverage, and consumers will be able to compare the insurance plans before purchasing coverage.

The law allowed states to opt out of establishing these marketplaces, in which case the federal government would run the marketplace in that state. As of the February 15 deadline for states to declare if they would run a marketplace, 26 states had decided not to set up an exchange. Seven states have announced that they would run an exchange in partnership with the federal government, with the remaining states—including six with Republican governors—deciding to run their own marketplaces.

The Senate Finance Committee on February 14 held a hearing that examined how well the Obama administration is progressing in implementing these new marketplaces. Gary Cohen, director of the Center for Consumer Information and Insurance Oversight at CMS, who is overseeing implementation of the marketplaces, was blunt: “We are very much on track with a plan that will get us to open enrollment beginning October 1.”

Senators on the panel were much more skeptical. Chairman Max Baucus (D.-Mont.) expressed concern about the “archaic” state of the computer systems of the agencies that will manage enrollment in the marketplaces. These agencies include the Social Security Administration, the Internal Revenue Service, and the Department of Homeland Security.

Sen. Maria Cantwell (D-Wash.) expressed concern that in the focus on getting the health insurance marketplaces up and running, the Obama administration was backing off two other parts of PPACA designed to expand health insurance options: the Basic Health Plan and the Consumer Operated and Oriented Plan (CO-OP) program.

The Basic Health Plan is a government-funded health plan designed for people who don’t qualify for Medicaid and which would operate outside the control of the new marketplaces. By law, it was supposed to be available starting in 2014, but the Obama administration has not issued any regulations for it, and it is not expected to be available until 2015. The CO-OP program, which 24 states have already received funding for, would establish nonprofit, member-owned health insurance cooperatives for either the individual or small group market, or both.

The recently enacted “fiscal cliff” legislation, the American Taxpayer Relief Act of 2012 (P.L. 112-240) stripped funding from further implementation of the CO-OPs, making their viability in the other 26 states impossible. Sen. Ben Nelson (D.-Fla.) called for accountability from HHS as to why CO-OP funding was cut back, noting that “if we have this kind of implementation, then we aren’t going to fulfill the goal of [PPACA].”

At the hearing, Don Hughes, health policy advisor to Arizona Gov. Jan Brewer (R), explained that Arizona ultimately decided not to run a state-based insurance exchange because the Obama administration has delayed for too long final regulations relating to both the exchanges and the expansion of Medicaid under PPACA.