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Gov to fed: Va. to use US exchange, keep oversight

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RICHMOND, Va. (AP) — Gov. Bob McDonnell told the Obama administration Thursday that while Virginia will use a federally run health insurance exchange, the state intends to retain regulatory authority over insurance providers that do business with Virginians through the exchange.

McDonnell's Feb. 14 letter to Gary Cohen of the U.S. Department of Health and Human Services confirms his December position not to commit Virginia to establishing its own exchange that would be financed and operated by the state. Instead, they could buy health insurance through an exchange that the federal government funds and runs.

But the Republican governor's letter also attempts to carve out an accommodation with the Democratic White House that would be novel among states. It stipulates that Virginia would still license or certify plans and providers that are marketed to Virginians in the federal exchange.

Exchanges, or new health insurance markets accessed mostly online, are scheduled to debut this fall as part of the Patient Protection and Affordable Care Act, President Barack Obama's health care overhaul.

The exchanges will offer individuals and their families a choice of private health plans, similar to what workers at major companies get. The government will help many middle-class households pay their premiums, while low-income people will be referred to safety-net programs they might qualify for.

McDonnell has been a fierce critic of the federal health care overhaul, particularly as a leading proxy last fall for Republican presidential nominee Mitt Romney, who pledged to repeal and revise the president's plan. Virginia was the first state to challenge the reforms' constitutionality when Republican Attorney General Ken Cuccinelli filed a lawsuit the same day Obama signed it into law. The Supreme Court upheld the law in a 5-4 decision in 2011.

In his letter to Cohen, McDonnell said Virginia "will choose to evaluate whether a plan or issuer meets particular certification standards and conduct other specified plan management activities as part of its long-standing regulatory role and in connection with market reform standards."

Those duties will be performed by the state's Bureau of Insurance partly in conjunction with the Virginia Department of Health, McDonnell wrote.

Legislation expected to clear the 2013 General Assembly before its scheduled adjournment in nine days would give the bureau authority to conduct plan management activities in support of the federal health overhaul; collect and analyze information on plan rates, benefits and cost-sharing; ensure plan compliance and resolve consumer complaints; provide technical assistance and decertify providers when necessary.

Virginia Health and Human Resources Secretary Bill Hazel said that since the federal government will run Virginia's program "it can take our recommendation or ignore it."

Joel Ario, who formerly headed the Obama administration's office for health insurance exchanges, said McDonnell appears to be looking for a way to stay in the game as the health care overhaul rolls out next year, while stopping short of a partnership with Washington.

"Virginia found an accommodation that helps consumers without entanglements the state wanted to avoid," said Ario, now a managing director Manatt Health Solutions, a consulting firm.

There are an estimated 1 million uninsured residents in Virginia, many of whom could get coverage. The Obama administration had no immediate reaction.

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AP health care writer Ricardo Alonso-Zaldivar in Washington, D.C., contributed to this report.

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