The U.S. Department of Health and Human Services released new regulations for the state health insurance exchanges that give states broad flexibility in their design, while also preserving a role for insurance brokers in the post-exchange marketplace.
The new rules address a number of different areas, including the establishment and operation of a state exchange; health insurance plan participation; individual exchange enrollment eligibility and insurance affordability; and employer eligibility for and participation in the Small Business Health Options Program (SHOP).
"These policies give states the flexibility they need to design an Exchange that works for them," said HHS Secretary Kathleen Sebelius in a press release. "These new marketplaces will offer Americans one-stop shopping for health insurance, where insurers will compete for your business. More competition will drive down costs and Exchanges will give individuals and small businesses the same purchasing power big businesses have today."
According to Alan Cohen, chief strategy officer for employee benefits company Liazon, there was a lot to like about the rules, which ran 644 pages, especially provisions that essentially provide a pathway for brokers to continue to participate meaningfully in the health insurance market after 2014.
"There has been the thought and fear in the industry that the only place where people would be able to get insurance were the public exchanges," said Cohen. "While the public exchanges will play a critical role, there is a significant role now for private entities to be a place where people can shop for insurance and have access to the subsidies. It is pretty clear in these rules that the government wants private enterprise to work closely with the public to make sure people get the insurance they need."
Judging by the response from America's Health Insurance Plans, the insurance industry also looks upon the new rules favorably.
"This rule recognizes that states are in the best position to establish exchanges because they have the experience and local-market knowledge needed to best meet consumers' needs," said Karen Ignagni, president and CEO of AHIP, in a prepared statement. "Exchanges will work best if they are true marketplaces that maximize choice and competition so that individuals, families and small businesses can purchase plans that are right for them."
AHIP did caution, however, that the federal government not duplicate state regulations as this could potentially add cost and complexity to establishing the exchanges.
Cohen would have liked the government to provide more guidance for the SHOP exchanges set up for small employers.
"In the SHOP area, I would have liked to have seen more emphasis on employee choice," said Cohen. "It is clear in the regulations that states will have the flexibility to determine whether employers will choose from a big menu of choices, a small menu or just one plan. We see that employees are happy with their coverage when they have more choices and would have liked to see employee choice stipulated in here instead of letting the states determine that."
That said, the rules may disappoint consumer advocates who wanted consumers to have a greater say in the governance of the state exchanges. The new rule allows for a broad swath of industry stakeholders to hold seats on the governing boards – with industry executives, including insurance companies, filling up to half of the seats and consumer representatives only guaranteed a single place at the governing table.