Health Care ruling clears path for Colo. exchanges

DENVER (AP) — Colorado Republicans who decried Thursday's health care ruling said the state did the right thing by beginning to create insurance exchanges required under the law, rather than waiting for the federal government to create one.

Democrats said that the decision clears the path for Colorado's health plans and that Colorado more than other states would have been tripped up if the health law had been axed.

State lawmakers last year created the Colorado Health Benefit Exchange, which forms a virtual marketplace to allow individuals and groups the ability to purchase health insurance at discounts like those in larger risk pools. About 13 percent of the state, or 656,000 state residents, had no health insurance as of 2011, according to U.S. Census estimates.

Colorado's exchanges are expected to launch October 2013. The U.S. Supreme Court's ruling gave clarity to the implementation of the exchanges, which could have been thrown in disarray if the federal law was struck down in its entirety.

"It affirms what we have been doing all along in moving forward with the exchange," said Democratic Sen. Betty Boyd, one of the architects of Colorado's exchange.

Gov. John Hickenlooper said the ruling "simply keeps Colorado on the path toward reform we've been on."

Ten states and the District of Columbia have passed insurance exchange laws to establish exchanges, according to the National Conference of State Legislatures. The idea of creating something similar to an exchange was broached in Colorado in 2008 by a panel studying health care reform, long before Congress passed a law.

Republican Attorney General John Suthers, who was among the attorneys general challenging the health care law, called the ruling "extraordinary and unexpected."

Justices in the 5-4 ruling upheld virtually all of the law's provisions, including the divisive individual mandate, saying it can be construed as a tax allowed under the Constitution.

"I think this bill would've never passed if they had said, 'Oh we're going to tax everybody who doesn't buy health insurance. It's just the nature of politics in America," Suthers said.

Suthers said the debate now moves to the "political arena," where he believes it will become more volatile in the presidential election.

Republican Rep. Bob Gardner, the chair of the legislative panel overseeing implementation of the exchange, agreed with Suthers that Colorado was wise to implement the insurance exchange.

"I think that Colorado did the right thing by having a mechanism to do its best to impose a Colorado solution," he said. But Gardner said he was outraged by the ruling that the individual mandate can be interpreted as a tax.

"They have hoodwinked the American people," he said.

Republicans saw a bright spot in the ruling regarding Medicaid expansion, where the court ruled the federal government can't withhold states' entire Medicaid allotment if they don't take part in the law's extension. Colorado's GOP has criticized fast-growing Medicaid spending and called for Colorado to buck the federal government to trim costs.

Hickenlooper said Thursday that it was too soon to say whether Colorado would raise income caps for adults without children who receive Medicaid.

"We're certainly looking at it and trying to figure out a way to do that and still live within our means," he said.

Health care activists who backed the health care law said Colorado is in better shape because it was upheld.

Dede de Percin, executive director of the Colorado Consumer Health Initiative, said Colorado was ahead of the federal government on many of the new law's provisions, not just the exchange and expanded Medcaid eligibility but also on laws about preventive screenings and new guidelines for medical underwriting.

"There's been a lot of debate about the law, and I think now it's time for us to get together and move forward," de Percin said.

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Exchanges could survive even if health reform dies

Even if the Supreme Court strikes down the health care law, industry experts expect some states will still proceed with establishing health insurance exchanges.

NEW YORK (CNNMoney) -- The Supreme Court's review of health reform means any or all of the law's mandates, such as coverage of adult dependents up to age 26 and protections for people with pre-existing conditions, could be in jeopardy.

But health insurance exchanges -- which also must be set up as part of the law -- may survive and flourish even if the entire Affordable Care Act is struck down, industry experts said. Exchanges are meant to offer cheaper health plans, so more of the nation's 32 million uninsured can afford coverage.

Regardless of what happens to the health reform law, "there is bipartisan support for states having some kind of health insurance exchanges," said Christopher Condeluci, a tax attorney with law firm Venable LLP and former tax counsel to the Senate Finance Committee.

Among other things, health reform mandates that by 2014 all states set up a health insurance "exchange," an online marketplace where consumers who are underinsured or uninsured will be able to shop for subsidized coverage, and small businesses can buy more affordable plans for their workers.

The law also gives states federal grants to help build their exchanges.

The Court, which is expected to announce its ruling on the constitutionality of the Act later this month, could uphold the law, overturn it partially, or completely strike it down.

If the law is struck down completely, the loss of federal grants will make it harder for states to start exchanges, said Brett Graham, head of the Insurance Exchange Practice at law firm Leavitt Partners in Salt Lake City, Utah.

But the "train has already left the station" and some states will establish exchanges anyway, Graham said.

Indeed, even before health reform passed in 2010, Massachusetts and Utah already operated insurance exchanges. And a handful of states were exploring setting them up as a way to cut their health care spending by getting more residents insured, said Dan Schuyler, former director of technology who helped launch Utah's exchange in 2009.

With fewer uninsured people, there's less financial burden on states' public health-care programs such as Medicaid.

Soon after health reform became law, two dozen states reached out to learn more about Utah's program, said Schuyler, now a director with Leavitt Partners.

Two years later, many of those same states remain committed to establishing exchanges. California, Oregon, Maryland, Colorado and New York have already passed legislation to establish state-based exchanges by 2014, said Brett Graham, head of Leavitt Partners' Insurance Exchange Practice.

That's in contrast to some other states that have asked for waivers on meeting the deadline for setting up exchanges, are taking a wait-and-see approach, or are actively fighting health reform.

In any case, consumer demand for the exchanges is already there, said Condeluci. "Whether it's individuals buying their own coverage or employers buying it for them, people want a consumer-friendly place to buy health insurance," he said.

Still, if the law is struck down, creating exchanges will get trickier, said Jeff Munn, vice president of benefit policy development with Fidelity Investments.

"Without the mandate of a uniform structure, states themselves have to figure out what the exchanges look like," said Munn. "It will be a little bit of a Wild Wild West."

Another big question is how the exchanges will be financed if the federal government doesn't pony up money for them, said Munn.

Also unclear is whether states that already got federal grants to set up exchanges would have to give it back, said Munn.

But despite these questions, Munn believes more exchanges will begin to roll out.

"In many states the scaffolding is already there for health exchanges," he said. "The hope is that if they build it, people will come." 

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Exchanges could survive even if health reform law dies

Even if the Supreme Court strikes down the health care law, industry experts expect some states will still proceed with establishing health insurance exchanges.

NEW YORK (CNNMoney) -- The Supreme Court's review of health reform means any or all of the law's mandates, such as coverage of adult dependents up to age 26 and protections for people with pre-existing conditions, could be in jeopardy.

But health insurance exchanges -- which also must be set up as part of the law -- may survive and flourish even if the entire Affordable Care Act is struck down, industry experts said. Exchanges are meant to offer cheaper health plans, so more of the nation's 32 million uninsured can afford coverage.

Regardless of what happens to the health reform law, "there is bipartisan support for states having some kind of health insurance exchanges," said Christopher Condeluci, a tax attorney with law firm Venable LLP and former tax counsel to the Senate Finance Committee.

Among other things, health reform mandates that by 2014 all states set up a health insurance "exchange," an online marketplace where consumers who are underinsured or uninsured will be able to shop for subsidized coverage, and small businesses can buy more affordable plans for their workers.

The law also gives states federal grants to help build their exchanges.

The Court, which is expected to announce its ruling on the constitutionality of the Act later this month, could uphold the law, overturn it partially, or completely strike it down.

If the law is struck down completely, the loss of federal grants will make it harder for states to start exchanges, said Brett Graham, head of the Insurance Exchange Practice at law firm Leavitt Partners in Salt Lake City, Utah.

But the "train has already left the station" and some states will establish exchanges anyway, Graham said.

Indeed, even before health reform passed in 2010, Massachusetts and Utah already operated insurance exchanges. And a handful of states were exploring setting them up as a way to cut their health care spending by getting more residents insured, said Dan Schuyler, former director of technology who helped launch Utah's exchange in 2009.

With fewer uninsured people, there's less financial burden on states' public health-care programs such as Medicaid.

Soon after health reform became law, two dozen states reached out to learn more about Utah's program, said Schuyler, now a director with Leavitt Partners.

Two years later, many of those same states remain committed to establishing exchanges. California, Oregon, Maryland, Colorado and New York have already passed legislation to establish state-based exchanges by 2014, said Brett Graham, head of Leavitt Partners' Insurance Exchange Practice.

That's in contrast to some other states that have asked for waivers on meeting the deadline for setting up exchanges, are taking a wait-and-see approach, or are actively fighting health reform.

In any case, consumer demand for the exchanges is already there, said Condeluci. "Whether it's individuals buying their own coverage or employers buying it for them, people want a consumer-friendly place to buy health insurance," he said.

Still, if the law is struck down, creating exchanges will get trickier, said Jeff Munn, vice president of benefit policy development with Fidelity Investments.

"Without the mandate of a uniform structure, states themselves have to figure out what the exchanges look like," said Munn. "It will be a little bit of a Wild Wild West."

Another big question is how the exchanges will be financed if the federal government doesn't pony up money for them, said Munn.

Also unclear is whether states that already got federal grants to set up exchanges would have to give it back, said Munn.

But despite these questions, Munn believes more exchanges will begin to roll out.

"In many states the scaffolding is already there for health exchanges," he said. "The hope is that if they build it, people will come." 

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Health plans launch own exchanges ahead of public versions

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St. Paul, Minn. — Commercial health insurers are scrambling for position as a key part of the federal health law threatens to upend their marketplace in two years.

Health plans are trying to lock in business before government-sponsored health insurance exchanges go online in 2014. Several large insurers are launching private insurance exchanges to protect themselves against competition from the public exchanges.

Not since the advent of Medicare and Medicaid in the 1960s has there been such big changes looming on the horizon for health insurers. In less than two years, the federal health care law will usher in more restrictions on premium increases, tens of millions of new customers, and a way for consumers to comparison shop online for their health insurance.

An estimated 1 million Minnesotans will eventually get their health insurance through an exchange.

Sabrina Corlette, research professor at Georgetown's Health Policy Institute, said those are just a few of the changes coming in 2014. Just how insurance markets will shake out is anyone's guess, she said.

"Insurance companies are grappling with the uncertainty like everybody else and trying to look two years down the road and how to position themselves," Corlette said. "[What] also needs to be watched closely [is] that it's working for the consumer."

Corlette says there's a lot of jockeying going on as insurers try to position themselves to either maintain or expand the market share they currently have. That's no simple task given the shifting sands.

The prospect of public insurance exchanges are driving some of the maneuvering. As laid out in the health care law, they will allow consumers and small businesses to comparison shop for health plans. Now, a spate of new privately-run online insurance shopping sites are cropping up to cater to small businesses struggling with rising premiums, including "My Plan by Medica" in Minnesota.

Last August, United Health Group's subsidiary OptumHealth bought Connextions, an exchange company based in Florida. Then in September, three large, independent health insurers invested in Minneapolis-based Bloom Health's private exchange.

Medica's John Naylor said public or private, the basic concept of an exchange — allowing employees to choose among many different policies online — is a good one.

"We have seen a trend of giving consumers more choice. And in health care, it's an industry that with the exchanges out there coming in 2014, there's a lot of focus and energy around how do we give employees choice," Naylor said.

But with many private exchanges, there's only so much choice. On the public exchanges, users will be able to choose among a variety of plans offered by different insurers who are competing for business.

Not so on some of the new private exchanges. They may offer plans from only one insurer — the one that's providing the exchange. That's the case with both My Plan by Medica and the Blue KC Exchange from Blue Cross Blue Shield of Kansas City.

Blue Cross' Ron Rowe said the goal is to get people used to dealing with an exchange and the company's products before there's additional competition from the public exchanges.

"Our thought is that at least today we're better off to develop a relationship with them, have them used to getting their service from us, feeling good about the service they get from us, developing some rapport, some trust," Rowe said.

Rowe said the hope is to develop some customer loyalty, so Blue Cross won't lose business to the public exchanges once they go online.

Washington and Lee health law professor Timothy Jost said the private exchanges may help insurers fend off competition once the public exchanges go online.

"It's not all that easy to switch a plan once you have a plan in place; people are used to using the doctors and hospitals associated with a particular plan," Jost said.

Exchanges are also allowing employers to cap the amount they pay for workers' health coverage. Employees get to pick from a range of plans, some of which may require that they pay extra.

Abir Sen of the Minnesota-based private exchange Bloom Health said that approach is attractive to small businesses. He said it's a way for them to gain control over unpredictable, but growing health care costs.

"This is very much a market-driven solution where the market is telling us here's what we need and the industry is responding accordingly," Sen said.

But over time, capping employer contributions could leave workers shouldering an ever-growing portion of premium costs.

The big question for insurers is if they build exchanges, will small employers come?

Economist Paul Fronstin, director of the non-partisan Employer Benefits Research Institute said small business owners will approach both private and public exchanges with caution.

"Enrollment in both is going to start off slow and grow over time as employers see how they're working and get more information about them," Fronstin said.

Corlette said cost will be the deciding factor in whether businesses buy insurance from either a public or private exchange.

"It's got to be affordable. And if you're offering them an alternative, it's got to be cheaper than what they can currently get," she said.

Corlette says the exchanges also need to provide decent coverage that's easy to administer.

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A Republican rift on health exchanges

???initialComments:true! pubdate:01/18/2012 11:05 EST! commentPeriod:14! commentEndDate:2/1/12 11:5 EST! currentDate:1/18/12 11:0 EST! allowComments:true! displayComments:true!Posted by Sarah Kliff at 11:05 AM ET, 01/18/2012

(KAISER FAMILY FOUNDATION) The Obama administration has spent $729 million laying the groundwork for health insurance exchanges, according to a White House report published this morning. That number will likely tip over $1 billion in the coming months, as states continue setting up the new marketplaces where Americans will shop for health insurance beginning in 2014. As the above map from the Kaiser Family Foundation illustrates, states are pretty much all over the place on exchanges right now. Fourteen have established marketplaces and another five intend to do so. Then, there are the less active states: 22 states continue to study their options, while two have decided not to do anything at all.

The report shows what the administration’s spending has purchased: Buy-in on implementation from states that aren’t exactly fans of the Affordable Care Act. Twenty-eight states have received multimillion-dollar “exchange establishment” grants to get started on the heavy lifting of building a health insurance marketplace. Half of those states have Republican governors, a few of whom have embraced the idea of health insurance exchanges enthusiastically.

“What we’re trying to do here is set up an Alabama health insurance exchange so people in the state, regardless of where you are in life – whether you are a young mother or whether you are college student or whether you are an elderly person with a preexisting disease – you will be able to purchase insurance,” Alabama Gov. Robert Bentley, a Republican, told a local paper late last year.

What the White House doesn’t highlight are states that haven’t bought in — those that have resolutely resisted setting up an exchange. Florida, Louisiana, Texas and others have committed to not moving forward on implementation until the Supreme Court rules on the health reform law’s constitutionality. Two years after the health reform law passed, many states are taking a wait-and-see approach: As the above map shows, 22 states are still studying their options on health insurance exchanges.

Ultimately, we’re seeing a rift within the Republican party over whether to implement the health insurance exchanges. Some support implementing the law and retaining more power as it moves forward, as the federal government can step in and set up exchanges in states that don’t move forward on their own. Other states, however, want to completely opt of implementing a law they believe to be unconstitutional.

“We’ve encouraged states to move forward and towards an exchange,” one administration official told reporters on a call this morning. “Every day that passes is one less day to build an exchange.”

The biggest test will come at the end of this year. In January 2013, the Obama administration has to certify whether or not a state has made enough progress to run its own exchange. If it hasn’t, Health and Human Services will come in and do the task itself. That’s when the still-recalcitrant states will have to make a final decision on whether to opt in or opt out.

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