California Healthline Daily Edition

Summaries of health policy coverage from major news organizations

State-Based Insurance Exchanges Seen as Key to Reform Law’s Success

Although many Democrats and Republicans are divided over the health reform law, the state-based health insurance exchanges created under the overhaul appear to have strong bipartisan backing, CQ HealthBeat reports (Reichard, CQ HealthBeat, 10/22).

Background of Exchanges

Under the overhaul, states by January 2014 must create insurance exchanges that provide coverage options for individuals and small businesses.

The exchanges are intended to foster a competitive market and hold insurers to strict new standards while attracting consumers. States can choose to administer their own exchanges, for which they must have some infrastructure in place by January 2013, or ask the government to run the exchanges for them (California Healthline, 10/7).

States' Leadership

Liberals and conservatives alike see the exchanges as a way to shift health care decision-making and purchasing powers back to the consumer, according to the New York Times  (Pear, New York Times, 10/23).

During an Alliance for Health Reform forum in Washington, D.C., on Friday, health officials and experts noted that both major parties generally support the exchange model.

At the forum, Joel Ario -- deputy director of the HHS Office of Consumer Information and Insurance Oversight, which is responsible for monitoring states' progress in establishing the exchanges -- said that state officials have a keen interest in creating the exchanges because their states' existing insurance markets for individuals and small businesses are "broken."

Ario said that HHS is in the process of developing guidelines for states, which will be issued before releasing two major regulatory proposals next spring and fall that govern the creation of the exchanges. He said states need to work quickly to enact legislation that creates their exchanges before 2012 (CQ HealthBeat, 10/22).

California's Example

Last month, California Gov. Arnold Schwarzenegger (R) signed legislation (AB 1602, SB 900) that made California the first state to establish a health insurance exchange under the reform law.

The two bills will provide the foundation for the California Health Benefit Exchange, which will offer a marketplace of health insurance options and establish an independent board to oversee the exchange (California Healthline, 10/1).

Models in Massachusetts, Utah

According to the Times, proponents of the exchanges often cite Massachusetts and Utah, which already have some type of exchange in operation, as examples for other states to follow.

The Utah Health Exchange organizes the market and enables consumers to review a range of health plans that are offered by participating insurers.

Massachusetts' exchange, known as the Connector, serves as an "active purchaser" by drawing bids from insurers and negotiating prices and benefits that would be most beneficial to residents, the Times reports (New York Times, 10/23).

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