As Washington, D.C. went about creating its health insurance exchange to comply with President Obama’s national health care law, they had to deal with a unique problem. Given its relatively low population and already generous Medicaid program, officials determined there weren’t enough uninsured residents in the city to make a new exchange viable without more drastic action. So, they have taken the step of forcing all individuals, and businesses with between two and 50 employees, into the exchange. The idea is that by 2014, the Obamacare exchange will be the sole market to purchase health insurance in the District for individuals and small businesses whose plans aren’t “grandfathered in.” By conscripting these individuals and businesses, officials hope to meet the critical mass of participants they believe are needed to make the exchange viable (roughly, at least 100,000 people).
In a meeting with the Washington Examiner on Tuesday, members of the D.C. Health Benefits Exchange Authority tried to argue that their aim was to make the market function better.
“We are trying to find out the best way that we can implement this with the businesses so that there is minimum disruption in the marketplace as we implement this law,” the board’s chairman, Mohammad Akhter, said. “We looked at this not as a government venture, but as an independent venture…We want it to be ultimately self-sustainable to be able to do the work we need to do serving the small business community and uninsured people.”
Yet on top of taking the step of forcing individuals and small businesses into the exchanges, the board will be tasked, within the confines of Obamacare, with designing the health insurance policies that will be offered on those exchanges.
“We decided, generally speaking, to take a passive approach to insurance offerings in the regulatory sense, which means we’re not going to dictate detailed specifics for plan offerings,” vice chairman Henry Aaron insisted. Yet he added, “We do have a responsibility for deciding what is a qualifying health care plan. We have taken no decisions yet on that.”
Specifically, the board has not yet determined whether high-deducible health care plans with lower monthly premiums – plans that would make sense for younger and healthier beneficiaries – will be allowed in the District.
“We have not yet faced the question of what, if any, restrictions would limit the offering of a high-deductible plan within the exchange,” Aaron said. “I cannot answer that because I don’t know where we’re going on that. We haven’t received the staff work, we haven’t even begun to discuss it within the insurance working committee, and it hasn’t gone to the full board.”
Aaron conceded that younger residents and some small businesses could be subjected to higher premiums as a result of the law.
“I have always said when looking at this bill, that if I were a young person, I can see elements of this bill that I wouldn’t like in the short run,” Aaron said.
He also said that, “some companies are going to face higher premiums…If I employ a bunch of 25 year-old programmers and I’m in a large pool that includes a large company that hires a bunch of 55 year-old plumbers as well, then things are going to average out in that pool and there will be shifts in premiums and some companies will pay higher premiums as long as they’re not grandfathered.”
One of the main ideas of the health care law and related regulations is to force younger and healthier people into the insurance market to help subsidize older and sicker Americans who currently have difficulty finding insurance. But Aaron argues that even if they pay more in the short-term, younger people will be better off as they eventually grow older and rack up higher medical expenses.
“I think in the end, people are going to have more effective choice than they do today for a simple reason,” Aaron said. “The market for health insurance is going to be very significantly expanded in the District, the rules are going to be transparent, and it’s going to become a much more attractive place for insurance companies to enter than it has been to date. As things now stand, there’s one very dominant insurer and there are a number of smaller ones. We think it is likely there is going to be more competition among a variety of health insurers and we think that is good for everybody.”
Akhter said that D.C. has met every federal deadline and expects to continue doing so, but conceded that the time pressures have made it difficult for them to fully explore all possible methods of complying with the law. Exchanges will have to be ready to accept enrollees by next October.
“If you look at the whole implementation of the Affordable Care Act, the time pressure is brutal frankly,” Akhter said. “Things have to be done so fast and quick that there is not enough time to go through the whole litany of things that one could.”
He later added, “There’s no doubt that if there was better timing this thing could have been done better. There would have been a lot more consultation, a lot more discussion, a lot more debate. But the reality is this is the way the timing is presented. So, we have to run with what the deadlines are to meet the deadlines.”
One of the big challenges is that the federal government is going to have to create a massive data system that compiles Americans’ incomes to determine their eligibility to receive subsidies to purchase insurance on the exchanges. Those data have to be able to interact with multiple federal agencies and be fed into state systems.
“We have to set up the largest data system the District is ever going to have that’s going to determine eligibility,” Akhter said.
He went on to explain, “I don’t know how well these things will work. So we need to have flexibility. I’m working on the assumption that everything will go smoothly and we’ll be ready to go, but recognizing that there could be some bumps along the way, some flexibility would need to be there.” Based on the fact that the Obama administration has already extended some deadlines, he said he’s hopeful there will be that flexibility.
Under the law, states have the option of either designing their own exchanges, or allowing the federal government to step in. So far, at least 15 states (with predominantly Republican governors) have decided to default to let the Obama administration do the work, while 16 states plus the District have decided to do it themselves, according to a compilation by the Kaiser Family Foundation. Six states are planning a joint exchange, and the rest are still undecided.
Aaron said it remains to be seen who will do a better job.
“I don’t know how well the feds are going to do and the jury is out on how well the states are going to do,” he said. “I could well imagine a situation in which the states screw up and the feds do the job well. And I could also imagine a situation that’s just the reverse.”