If government health insurance exchanges come to life, states will have to figure out how the entities will be funded.
Managers of the proposed federal exchange could have an edge, because the U.S. Department of Health Human Services (HHS) already has figured out a funding strategy.
HHS wants to make federal exchange services free for the states and have the federal exchange earn its keep by charging user fees.
Deborah Bachrach and Patricia Boozang, health policy analysts at Manatt, Phelps & Phillips L.L.P., Washington, discuss exchange funding in a health insurance exchange paper prepared for the National Academy of Social Insurance (NASI), Washington, and distributed by the Robert Wood Johnson Foundation, Princeton, N.J.
In the paper, the analysts look at how the “federally facilitated exchange” — the FFE — might work.
Drafters of the Patient Protection and Affordable Care Act of 2010 (PPACA) added health insurance exchange program requirements in an effort to give individuals and small groups a way to compare and buy high-quality major medical coverage using new federal tax subsidies.
The U.S. Supreme Court is considering the constitutionality of PPACA.
If the act survives, the exchanges are supposed to start distributing coverage Jan. 1, 2014.
A state could be home to one state-based exchange, or several . A state also could join a multi-state exchange consortium or let the federal government provide exchange services for its residents through the FFE.
The FFE could supply all exchange services for a state’s residents or some, or it could simply help a state-based exchange handle administrative services.
A state-based exchange could be an arm of state government or some kind of independent, nonprofit entity.
Bachrach and Boozang consider many aspects of FFE operations, including how an exchange would apply PPACA eligibility guidelines, how it would enroll consumers in health plans, how it would work with health plans, and how it would handle consumer assistance and financial management issues, such as what the exchange revenue pies might look like.
HHS officials suggested in draft regulations released in July that, if a state works with the FFE to provide exchange services, the state should handle at least some human-to-human consumer assistance functions and the FFE should handle more high-tech consumer assistance functions, such as websites, call centers and eligibility verification, the analysts write.