The Washington D.C. Council has temporarily approved a plan by the D.C. Health Benefits Exchange Authority requiring that all small group health plans be sold exclusively in the exchange starting in 2015.
Without much debate on the proposal, the Council voted unanimously for the bill. But the law will sunset in 2014, to let the city draft a more permanent law and allow more discussion on the benefits and drawbacks of prohibiting a non-exchange small group market.
First proposed by the D.C. Health Benefits Exchange Authority last fall, the law has stirred up some controversy, with the exchange and some consumer advocates supporting a more robust exchange market and some businesses calling the requirement an overreach.
Led by executive director Mila Kofman, the former insurance superintendent of Maine, the Health Benefits Exchange Authority has argued that the viability of the exchange's individual market depends on a large risk pool that would be created by merging the exchange's individual and small group markets.
The individual market on the exchange and the exchange itself wouldn't be sustainable without substantial small business participation, the Authority argues, with an existing individual market that's much smaller than the small business market. In 2011, the D.C. Department of Health Care estimated, the city had 19,000 residents covered by individual plans and 125,000 covered by small business plans.
Some small businesses and business associations, though, have criticized the move as unfair -- and an example of deviating from President Obama's "If you like your health plan, you will be able to keep your health care plan. Period" promise.
Last fall 150 small businesses and trade groups sent a letter to the Health Benefits Exchange Authority executive board, asking them to reconsider the policy. By "dismantling and recasting the separate health insurance marketplaces that serve small employer groups and individuals in the District, D.C. policymakers would take away the option of keeping the health plan that they now have," the letter said. "Rather, to continue to offer health benefits to employees after 2013, small employers like us would have no choice but to go to an undefined, untested, more expensive entity to obtain coverage."
Signed by a range of employers, including national associations, nonprofit foundations, law firms, consultants and hospitality companies, the letter went on to question the financial logic of creating a small business exchange in the first place, for such a small regional market. "In addition, we cannot ignore the significant costs of administering the Exchange which will undermine one of the key goals of the federal law -- affordability. Small employers already face significant increases to health plan costs each year and our budgets are stretched thin. Adding an unexpected requirement for businesses with 51 to 100 employees to participate will not only be a shock to future planning, but will impact an employer's bottom line."
Ahead of the D.C. Council's vote, small businesses and insurance companies had urged a one-year delay to transition to the all-exchange small business market, but the council ended up passing the exchange Authority's proposal, while still leaving open the possibility of changing the policy next year.
In other policy making, the D.C. Council also rejected a proposal to give the exchange more regulatory authority, voting down an amendment that would have given the District's Insurance Commissioner the ability to reject insurance rates deemed to be not in the consumer's interest.
Meanwhile, as the exchange prepares for October enrollment, it's dusting itself off after a brief PR skirmish with CareFirst BlueCross BlueShield, D.C.'s largest insurer which has more than half the share of both the individual and small group markets.
Saying that the insurer was going to scale back its plan offerings in the exchange, D.C. insurance commissioner William White issued a strong statement.
"For many years, CareFirst has benefited from its position as a market leader in the District," White said in a statement on June 2. "As such, it should show greater concern for the interests of the overall marketplace. CareFirst has a decision to make. Do they stand with the workers and business owners of the District of Columbia, or will they continue to put profits over principle?"
CareFirst officials seemed surprised by the attack, and said subsequently that a wide range of plans would be offered in the exchange, and about an equal number offered inside and outside the exchange market. The company has filed proposals for next year for 15 individual health plans and 54 small group health plans to be offered both within and outside the exchange.
Other insurers getting set to sell in the D.C. exchange include Aetna, Kaiser Permanente and United HealthCare.