An article in today’s The New York Times highlights the state Senate’s failure to pass a bill creating the health insurance exchanges required under the new federal health law. It seems that some of the same people who normally criticize the Legislature for rushing complex bills into law are now complaining about the Senate’s lack of action.
Under the headline headline “G.O.P Senators in Albany Block Federal Aid to Fulfill Part of Health Law,” the article portrays this as a politically motivated effort by the Senate Republicans to defy the Obama administration.
But partisan motives aside, this story represents much ado about nothing in particular. Despite the lack of a health exchange bill, after all, New York “has already received $39 million in starter grants to begin planning a state health benefit exchange, which would function as a sort of one-stop shop for individuals and small businesses to compare the insurance plans that are available to them and enroll in one of them,” the Times reports.
And it’s not as if New York doesn’t have plenty of company. As the Times also notes, only 13 states have passed such legislation. Another two, Massachusetts and Utah, previously had set up their own exchanges prior to the Obamacare’s passage.
Paul Howard, director of the Manhattan Institute’s Center for Medical Progress, provided some much-needed perspective on the New York situation in this space a few months ago. Howard’s blog entry is worth re-re-reading in its entirely. Here’s the part most relevant to today’s Times article:
Under the Affordable Care Act, states are required to set up health insurance exchanges where individuals and small businesses can shop for private health insurance. Families and individuals making up to 400% of the Federal Poverty Level are eligible for significant premium tax credits and cost sharing subsidies. Very small businesses (25 and under) will also be eligible for tax credits if they offer “meaningful” coverage.
Ideally, the exchange will operate like a Travelocity.com for health insurance.
But the last version of the exchange bill, S.5849, pushed all of the major policy decisions to the exchange for further study, so New Yorkers won’t know what kind of exchange will be created for at least months after the legislation passes. (The legislature reserved the power to pass additional exchange legislation based on final recommendations from the exchange.)
In short, expect lots more lobbying. Consumer groups, unions, and regulators are pressing for an exchange with the power to select “winners” for inclusion in the exchange market. They hope that the exchange will put pressure on insurers to control costs and improve quality by leveraging the buying power of its members.
Others, including myself, would like to see a “clearinghouse” style exchange that includes all insurance plans that meet minimal federal standards, including consumer-friendly plans like Health Savings Accounts and other value-based insurance designs. We believe that flexibility and market competition will offer consumers and small businesses a wider range of affordable health insurance options than those likely to be chosen by regulators. (For more background on how this type of exchange might work, see my recent report, Building a Market-Based Health Insurance Exchange in New York.)
In Massachusetts, which has had the type of exchange favored by consumer groups for several years, insurance costs are still among the highest in the nation – and very few small businesses have purchased coverage through the state’s high-priced exchange. Efforts to reform the exchange continue today.