Iowa has made many small steps toward health reform implementation; it is now poised to take its first big step.
The Senate State Government Committee is looking at Senate Study Bill 1063, which would establish Iowa’s health benefits exchange. Under the health reform law, an exchange is a regulated marketplace in which individuals and small businsses can compare and purchase health insurance plans.
The Affordable Care Act allows states considerable latitude in how to administer their exchanges — from how it is governed and financed to who or what administers it. States could even operate multiple exchanges within their state or create a regional exchange with a neighboring state. In December, an Iowa Fiscal Partnership brief detailed many of the choices for Iowa in creating its exchange.
Unlike the two existing exchanges — the Utah Health Exchange and the Massachusetts Health Connector, which are housed within an existing state agency and in a newly created agency, respectively — SSB 1063 would create a non-governmental non-profit organization to administer Iowa’s exchange. Seven voting board members would be appointed by the governor with Senate confirmation, with the Commissioner of Insurance and the Director of Human Services acting as non-voting board members.
Decisions such as exchange governance — and many, many more decisions — have to be weighed against the requirements of the Affordable Care Act, existing state law, the interests of the public and the goals of policymakers. Further, the experiences of other states with exchanges, though limited, and likely outcomes based on sensible economic projections should be taken into account.
In light of those criteria, features of SSB 1063 include:
- Board composition — board members are to include “representatives of consumers and small employers”; strong conflict of interest prohibitions for brokers, insurers, and similar organizations.
- Enrollment procedures — relevant agencies could share information to easily enroll Medicaid-eligible people.
- Carriers that offer high-quality plans in the exchange would be required to offer identical plans outside the exchange at the same rates.
- Data collection — the exchange would have the authority to collect data from insurers on quality and cost to help consumers make informed comparisons.
- Consumers would have access to information about their deductible, co-insurance, network, etc., in easy-to-understand language.
- Attempts to minimize adverse selection, the phenomenon of sick people using the exchange and healthy people remaining outside the exchange — by charging uniform fees to health plans in and out of the exchange; these fees would finance the exchange’s operations.
- Independence of exchange — Funding streams would be independent of the legislative process.
However, SSB 1063 has some omissions that raise concerns:
- Board composition — while those who might benefit financially from the insurance side would be prohibited from sitting on the board, the legislation would not prohibit doctors, hospitals, representatives of hospital associations, and other providers from sitting on the board.
- Enrollment procedures — presumptive eligibility would further streamline these procedures.
- Risk pooling — it appears that the individual and small businesses would be separate risk pools. Combining them would reduce risks for insurers and possibly keep prices down.
- Attempts to minimize adverse selection — does not require insurers operating in the state to make any offerings in the exchange, nor does it address the potential for insurers to pay brokers higher commissions on plans sold outside the exchange.
While hardly a perfect bill, SSB 1063 is an effort to start Iowans down the road toward better access to quality and affordable health insurance.
Posted by Andrew Cannon, Research Associate