Health insurance marketplaces coming to a state near you
Even the states whose politics make the idea of ďObamacareĒ unacceptable are feeling the pressure to begin thinking about insurance marketplaces. As the federal law deadlines edge closer, states must either create their own exchanges through which citizens can buy their policies or face the threat the federal government will offer their own version. Why should GOP states fear the federal government on this? Forgive a little cynicism. If GOP states sit down to write laws for local marketplaces, they can do whatever is in their power to protect the interests of their local insurance companies. Although we have yet to see any specific proposals from the federal government, itís likely their plans will be a boilerplate solution that favors consumers over the insurers. Since the eventual network of local exchanges will allow millions of Americans to buy their policies, anything that swings the balance of power in favor of consumers is bad news for the profitability of the insurers. This is forcing even the most resistant of state legislatures to start drafting their own laws.
Leading from the front on this comes California which has just passed two statutes to bring the local marketplace into being. Itís likely many other states will follow the Californian solutions except, in Iowa, we have an information-only exchange in preparation which will leave it to the private insurers to sell all policies in that state. The Californian experience is interesting. In addition to the specific provisions mandated by federal law, there has actually been some bipartisan negotiation, if only because Governor Schwarzenegger made an early announcement in favor of the federal system. Not unlike this website, Californians will be able to access a website containing standardized information about policies allowing a full comparison on a like-for-like basis. If citizens have problems in understanding this information, there will be a toll-free number with real people available to explain the health plans to the callers. Even more importantly, this information will be linked to the federal and state subsidies that will help pay for the coverage. The aim is to give people as much information about the available policies and how to pay for them through an independent website.
Experts in the health insurance market estimate more than 8 million Californians will be eligible to buy through this exchange. There will be a similar marketplace through which small employers can buy coverage. Any employer with less than 100 employees will be allowed to buy a plan with subsidies and tax credits as an encouragement. This should give about 4 million more people better coverage. To ensure local people will have access to cheap health insurance policies, there will be a board with powers to contract selectively with local insurers. This board will be mandated to get the best possible quality of coverage while preserving value for all Californians. Itís looking good for consumers whether they are buying in their own right or they get cover through their employers. To balance interests at this early stage, the Department of Insurance has approved some premium increases. Needless to say, local insurers are not impressed by this act of generosit