Bill Pierce is a senior vice president in APCO Worldwide’s Washington, D.C., office. He specializes in advising health care clients; his work includes policy development, issue advocacy, message development, crisis communication and media relations.
While much has been made of the recently enacted insurance reforms (no more pre-existing conditions, coverage for kids up to 26 years of age, etc.), Robert Pear of The New York Times recently claimed that the defining issue for success of health care reform is, in fact, state-based health exchanges.
According to Pear, “The success of President Obama’s health care overhaul, with its promise of affordable coverage for all, depends on the creation of such retail shopping malls, known as health insurance exchanges.” It couldn’t be said any better.
In explaining the key issues in the creation of these exchanges, he uses the examples of Massachusetts and Utah, both states that have exchanges but took very different paths to creating them.
Massachusetts took a very active role in creating its exchange. The state serves as a purchaser of health care, getting bids from insurance companies and negotiating prices and benefits with the goal of securing greater value for state residents than they could get on their own. Only those health plans that get approval from the state can be sold through the exchange. According to Jon Kingsdale, the former head of the exchange, “Massachusetts has been more selective and aggressive in contracting.”
Utah took another path. Utah’s exchange is open for all comers who want to participate. They define a minimum set of benefits that plans need to offer and let competition for customers regulate prices and make them attractive to potential purchasers. The manager of the Utah exchange, Matthew A. Spencer, said, “We are on the other end of the spectrum from Massachusetts.”
So as health reform moves forward, the question is which path other states will take. Or will they take a path in between? While it is hard to determine which model works best, census estimates from Massachusetts show coverage percentages of just over 95 percent, while Utah shows 85 percent (though it has been in effect for less time than Massachusetts). The national average is about 83 percent.
And the unknown variable is this – how many states will leave the creation and management of the exchanges to the federal government, an option available to all. Given the large number of states that have joined in the lawsuit challenging the constitutionality of the law, it is not inconceivable that many states, and possibly a majority, will choose to leave it to the federal government to create and manage their exchanges. And while this may sound contrary to those who support greater state control, it may be a calculated strategic political decision. If a large group of states leave it to the federal government to manage the exchanges, it may be difficult for the federal government to actually pull off such action, or at the least delay of implementation the exchanges and/or provide a mechanism – additional funding – for Congress to stop or delay the law.
Stay tuned – this fight will be carried out over the next two years.