By Katie Kerwin McCrimmon
While some states are still wrestling over whether to build their own health exchanges, Colorado is playing hurry-up offense, tackling major policy decisions including the biggest one on the horizon: how to pay for the online health insurance marketplace.
Now a reality across the country as the Affordable Care Act steams toward full implementation, health exchanges are supposed to make it easier for individuals and small business owners to choose and buy health insurance plans. Some people will qualify for government subsidies to help them afford insurance while exchanges will funnel others into public health insurance options including Medicaid, Medicare and CHP for children.
Colorado’s exchange — which will soon have a new name — is slated to open for enrollment in October of next year with coverage that will start on Jan. 1, 2014.
By Jan. 1, 2015, Colorado’s health exchange must be financially self-sustaining.
So far, Colorado has received two federal grants totaling $62 million that are funding the planning, technology design and start-up costs for the exchange. Federal taxes will also fund the first year of operations. Then, Colorado and other states must find ways to pay for the exchanges themselves.
The board creating Colorado’s exchange will tackle financial sustainability in meetings next month. Estimates in other states point toward annual operating costs that could exceed $50 million. Other states are considering user fees, sin taxes or ad sales to pay for exchange operations. A consulting firm is preparing cost projections for Colorado and will report to the board on possible sources of revenue. The challenge of paying for the exchange will be considerable since health insurance costs have already been climbing to unaffordable levels.
Other questions, both big and small, also loom.
What should the exchange be called? How will a network of “navigators” across Colorado be able to meet with people face-to-face to help them figure out which insurance plans to buy? Will they work for the exchange or for existing community-based health entities? What’s the best way to entice as many insurance carriers as possible to take the risk of selling their plans during the first critical year? Who will seek to buy health insurance in the first year? Will extremely sick individuals skew prices if, as anticipated, they are the first to line up for health insurance? And, will Colorado benefit by operating its own exchange?
As of mid-November, 17 others states and Colorado are building their own health exchanges while 16 others will default to a federal exchange. Six states are planning for partnership exchanges and 11 remain undecided. Many states waited anticipating that Gov. Mitt Romney might win the presidency in November and would follow through on vows to dismantle the Affordable Care Act. Instead, with President Obama’s victory, many states now find themselves staring down unrelenting deadlines to get moving.
Managers and exchange board members in Colorado say the state will benefit from having its own exchange because a Colorado-managed competitive marketplace should be better tailored to a state that is so geographically and economically diverse.
“We have always been building the exchange to meet the unique needs of Colorado,” said exchange Board Chair Gretchen Hammer, who is also executive director of the Colorado Coalition for the Medically Underserved. “We are much more confident in our ability to serve the diverse needs of Colorado, from people in rural and urban areas to individual consumers and commercial customers. We believe we’re better able to serve them with a Colorado exchange, with navigators trained by us.”
Hammer said Colorado has a relatively robust insurance marketplace with relatively strong competition, which is good for consumers. Board members want every decision they make to help foster vibrant competition and affordability for consumers. The biggest challenge in building the exchange is that there are so many uncertainties about the future.
“The marketplace will be unknown. The rules of the market will change. Consumer and business behavior will change,” Hammer said. “We all feel the tensions of doing our best to make good decisions, but also doing that in a time of uncertainty with an inability to predict how things will turn out.”
For instance, during an exchange meeting on Monday, board members were trying to decide whether to penalize insurance companies that decided to sit out the first year of the exchange by barring them from joining for two more years. Some of the insurance company executives on the board said that while their companies would oppose waiting periods, they personally felt some sort of waiting period was essential to entice as many insurers as possible to sell products on the exchange. Ultimately, the board voted to mandate one-year waiting periods for insurers who opt out of the exchange.
Among the many other decisions the Colorado exchange mangers have made is to create a statewide system of customer service agents who will be known as “navigators.” Initially, the exchange was conceived as a Travelocity-style online site where consumers could peruse different health plans and buy them on the spot. But planners realize that buying health insurance is much more complex than buying a plane ticket. So, they will have web-based help, a call center and in-person navigators who can help consumers pick the right options for them.
The exchange recently hired Adela Flores-Brennan, a well-known Denver health care attorney who used to work at the Colorado Center on Law and Policy. Flores-Brennan is now beginning to design a network of navigators who may or may not be direct employees of the health exchange.
“If you want to sit down face-to-face with someone, there will be a continuity of support to allow that,” said health exchange Executive Director Patty Fontneau.
She said it’s still unclear exactly how the navigator network will function.
“We’re seeing who’s out there already doing this type of work,” Fontneau said. She said Colorado is not unique in planning for a vast system of in-person navigators. Ultimately she suspects all states will opt for in-person help.
“It’s helping someone with what is truly a very complex process. I think navigators are absolutely critical,” Fontneau said.
Another decision on deck is picking a better name than the Colorado Health Benefits Exchange. While not critical in terms of policy heft, a new name could make the exchange more inviting and comprehensible to consumers.
“We just started getting ideas,” Fontneau said. “We will get public input. It’s not something we will do behind closed doors.”
Back when Gov. John Hickenlooper picked the members of the health exchange board, concerns arose that the board had tipped too far toward industry with five of the nine board members having ties to health insurance companies or for-profit health care businesses.
Hammer said that the policy work has been complex but constructive.
“Working with the members of this board has been one of the most rewarding professional experiences I have ever had,” she said. “Whenever there has been a direct conflict (of interest) people have recused themselves from a vote.
“The diversity of our perspectives has been a strength. It has certainly made our conversations long, but Colorado is a diverse state and we needed all kinds of minds coming together.”