This week’s Heatwave Health Wonk Review, hosted at Workers’ Comp Insider, included a very informative piece from Timothy Jost at Health Affairs Blog. Timothy writes about the PPACA-created health insurance exchanges that will come into existence in 2014. For anyone who is curious about how the exchanges will work, Timothy’s piece is a thorough look at the new regulations proposed by HHS to govern how the health insurance exchanges will work.
The exchanges will serve several functions: They will be a marketplace where individuals and small businesses can compare health insurance options and shop for a policy (all of which will be guaranteed issue in 2014, so medical underwriting will no longer be the obstacle that it is today for people looking for coverage in the individual market). The exchanges will be the place where people can apply for premium subsidies based on their income, and they will also serve a regulatory function by requiring the health insurance plans in the exchanges to meet quality and transparency rules.
The proposed regulations from HHS for the exchanges come to 244 pages, but Timothy notes that they are “practical, sensible, and functional” and that HHS tried to simplify things wherever possible, rather than complicate them. For anyone who wants to get the gist of the proposed regulations without reading the 244 pages that HHS released this month, I highly recommend that you check out Timothy’s article.
One particularly interesting provision of the exchanges has to do with open enrollment periods and the efforts by insurers to avoid adverse selection. Since all policies will be guaranteed issue as of 2014, there is obviously concern that people will wait to apply for coverage until they need treatment. The PPACA provides for financial penalties for those who opt to remain uninsured, but many have criticized those rules as being too lenient (especially in the early years) to be effective. To head off the problem of adverse selection, HHS has proposed open enrollment periods, with the first one scheduled for a five month period from October 1, 2013 to February 28, 2014. After that, there would be an open enrollment period from October 15 to December 7 each year. In addition, people would have access to special open enrollment periods following various life events (things like adding a dependent via marriage, birth, or adoption, a move, new eligibility for premium credits, etc.). In general, most policies would not become effective until the month following application, or the month after that if the application is completed late in the month. many carriers now allow applicants to apply today and have their policy become effective tomorrow, but pushing effective dates out to the following month is another way of avoiding adverse selection, especially given that all policies will be guaranteed issue once the exchanges are operating.
The PPACA provides for federally-run health insurance exchange in states that are unable or unwilling to set up their own exchanges. Colorado has taken steps already to start shaping our state-run exchange, but many states are politically opposed to anything related to the PPACA. Timothy notes that the guidelines released by HHS don’t really talk about how the federally-run exchange would work, since it’s obvious that they are trying to encourage the states to take an active role in creating their own exchanges.