Program October 2011 – Health Insurance Exchanges

October 13, 2011

Health Insurance Exchanges Offer Lower Costs, Clear Choices

Dr. Sidney Watson, attorney and specialist in health care law and health care access for the poor
John M. Huff, Director, State of Missouri Department of Insurance
Amy Smoucha, Health Care Organizer, Jobs With Justice

Health insurance exchanges are a crucial component of the Patient Protection and Affordable Care Act signed into law by President Obama in March 2010, yet few people understand what they are and how they can work. Three speakers demystified exchanges at our general meeting on October 13.

John Huff, director, Missouri Department of Insurance, explained that the law requires that states must establish exchanges through which individuals and businesses can purchase health insurance by Jan. 1, 2014. This is especially important for Missouri because a handful of insurance companies control the individual and small businesses markets, so competition among plans is very limited. If Missouri does not meet the 2014 deadline, a default federal exchange program will go into effect in the state. In the last legislative session, a bill to establish exchanges died in the Missouri Senate. The Senate is currently holding hearings, and Huff said it is still not certain that the legislature will pass a law in 2012. He said his department is laying groundwork for a process to establish eligibility. Information technology to integrate various state insurance programs such as Medicaid and high-risk must be set up.

Sidney Watson, professor of law, Center for Health Law Studies, St. Louis University, emphasized the need for health insurance reform through the Affordable Care Act. Health insurance companies have posted record profits in the first quarter of 2011, she said, with many devoting 40 percent to 50 percent of an individual’s premium to profit and overhead.

In Massachusetts, which has exchanges, Watson said the benefits to the state are impressive: 98 percent of residents are insured and the state is paying less than before the reforms. Purchasers choose from among Bronze, Silver, and Gold plans, but all plans must cover certain minimum benefits, which makes it possible for consumers to easily “compare apples to apples” when choosing a plan. In Missouri, it is impossible to decipher how plans’ coverage compares. Also Missouri is one of only eight states without rate review, whereas the Massachusetts insurance commission has the authority to approve rate increases. Not only is there no Missouri rate review process, but also the insurance commission cannot even collect data on rates. In many other states, insurance companies must file their rates and the commission can compare them. The inability to access rate information makes it difficult for Huff’s department to compare Missouri insurance coverage with that in Massachusetts and other states.

Missouri lawmakers want fewer controls on insurance companies and have stalled voting on the health insurance exchanges to obstruct anything President Obama proposes, said Amy Smoucha, statewide healthcare organizer, Jobs with Justice. She said her organization’s goal is to stop health care costs from reducing the standard of living of working people. Health care costs are barriers to building communities because if people are not healthy they can’t take care of their families, she said. She urged the audience to sign up with Missouri Health Care for All to receive emails and be active. She warned that public consensus about needed reforms must be built in the face of political threats to the new law.

In the lively question-answer session, Beverly White asked about the high salaries for health care CEOs. Huff said that under the Affordable Care Act, 80 percent of premiums must be spent on medical care and only 20 percent for overhead and CEO profits. An audience member currently facing a premium of more than $17,000 asked about how the law will specifically make health insurance affordable. Watson said that in 2014 “you won’t pay more than 9.5 percent of your income” for insurance. Smoucha added that there will still be copays and deductibles, but also more protections. She said we need aggressive health care regulation because insurance companies have proven they don’t care about health care for all.

For more information:
Missouri Department of Insurance
Missouri Health Care for All
National Association of Insurance Commissioners