As part of health reform implementation, states will create a large and complex new marketplace for the buying and selling of health insurance coverage. Through State Exchanges, individuals and small businesses may buy federally defined benefit packages from state licensed and certified Qualified Health Plans.

For health plans, this is a huge new market with potential enrollment of 25 million to 40 million or more. For individuals and small employers, it will create a new, highly regulated pathway to buy coverage and access subsidies. Some 16 million uninsured Americans are projected to be insured through State Exchanges. For states, implementation will present extraordinary policy, regulatory, administrative, and systems challenges.

Briefing on State Exchanges and Qualified Health Plans:

For members of the Medicaid Health Plans of America (MHPA), I recently conducted a webinar on State Exchanges and Qualified Health Plans. For a variety of reasons, Medicaid health plans are better positioned for the Exchange plan market than many commercial plans. For the webinar slide deck, click here (PDF).

It was part of a series of webinars by Sellers Dorsey for Medicaid health plan leaders. Sellers Dorsey’s other webinar topics included (1) grants and demonstrations under health reform law (PPACA), (2) Medicaid expansion, and (3) Medicaid drug rebate.

State Health Insurance Exchanges:

In a nutshell, starting January 2014:

  • Every state must establish an American Health Benefit Exchange for individuals and small groups to buy health insurance from Qualified Health Plans.
  • States must also create a Small Business Health Options Program Exchange (SHOP) for small businesses (separate or, more likely, part of a single state exchange).
  • States may operate the Exchange in a existing agency, create a new state agency, create new quasi-public independent agency, or contract with a non-profit non-insurer organization.
  • States may join together to operate multi-state, regional Exchanges.
  • If a state fails to create a fully functioning Exchange in time, HHS will operate an Exchange for that state. HHS will assess state readiness by January 2013.
  • Individuals and small businesses may buy health coverage insurance in or outside an Exchange. However, they must use State Exchanges to access the $450+ billion in new federal premium subsidies and tax credits.
  • State Exchanges will serve as a new, additional gateway to Medicaid and CHIP. Working with state Medicaid agencies, State Exchanges will screen all individuals who apply for Exchange coverage for eligibility for Medicaid and CHIP. If they qualify, they’ll be automatically enrolled in Medicaid or CHIP.
  • Only Qualified Health Plans (QHPs) may sell coverage through the State Exchange. QHPs must be state licensed health plans and certified by the Exchange as meeting an array of new federal and state requirements. This applies to each state where the QHP intends to operate.
  • Qualified Health Plans may also offer coverage outside the Exchange. Federal rules will vary somewhat for QHP coverage outside Exchanges.
  • The feds will contract with at least two nationwide QHPs and will offer $6 billion in grants and loans to help launch new cooperative health plans.
  • The new HHS Office of Consumer Information and Insurance Oversight (OCIIO) is responsible for federal oversight of the State Exchanges and Qualified Health Plans. OCIIO will release federal rules and guidance for Exchanges and QHPs.

At state option, large employers may buy coverage through State Exchanges starting in 2017. This, coupled with the strong possibility of crowd-out, could lead to major enrollment growth for QHPs.