Health Insurance Exchanges: Implications for Public Health Policy and Practice

This installment of Law and the Public's Health examines health insurance Exchanges. Exchanges, a centerpiece of the Patient Protection and Affordable Care Act (hereinafter referred to as the Affordable Care Act [ACA]),¹ are a longstanding concept underlying health reform models that turn on the competitive purchase and sale of health insurance products.² An overview of the Exchange provisions and key issues surrounding state implementation is followed by a discussion of the implications of health insurance exchanges for public health policy and practice.

BACKGROUND

In the world of employer-sponsored health insurance, employers select the health insurance products in which their employees will participate, while larger employers select the “third party plan administrators”³ of their self-insured plans. Smaller employers tend to have fewer purchasing options; furthermore, individuals who do not have access to employment-based coverage may find themselves without critical assistance in understanding their coverage choices, selecting a plan, and navigating their coverage arrangements once enrolled. States historically have regulated health insurance, and state health insurance agencies in all states oversee the business and marketing practices of insurers. But the primary responsibility of state insurance agencies is the regulation of insurance, not oversight of the relationships between consumers and the insurance market.

A basic purpose of the Affordable Care Act is to strengthen the health insurance market for both individuals and employers, with a particular emphasis on creating better choices for small employers and creating a stable insurance market for individuals and families without access to employer-sponsored benefits. To this end, the ACA establishes health insurance Exchanges as a principal feature of the law to provide the type of market structure and source of ongoing assistance and oversight missing from the existing insurance regulatory framework. In so doing, the ACA takes a page from the 2006 Massachusetts health reform legislation, which included the creation of the Massachusetts' Commonwealth Health Insurance Connector Authority, the state's health insurance exchange authorized to serve both individuals and small groups.⁴

The ACA authorizes federal funding to assist states in establishing American Health Benefit Exchanges; states that elect to establish an Exchange must complete their planning and be ready to become operational by January 1, 2014.⁵ In the case of states that either elect not to establish an Exchange or that are unable to meet federal standards as of January 2013, the Secretary of the Department of Health and Human Services (HHS) is required to operate a default federal Exchange⁶ to ensure that state residents will have access to Exchange services and operations. Access to an Exchange is crucial, not only for the consumer and small employer assistance an Exchange provides, but also because Exchanges represent the means of gaining access to the hundreds of billions of dollars in premium tax subsidies authorized under the ACA in the case of small employers and low- and moderate-income individuals and families.⁷

By 2015, states must ensure their Exchanges are operational and “self-sustaining.” In other words, the Exchanges must be functioning with sufficient funding derived from states' budgets, user fees, assessments, or other sources of funding. While HHS is required to issue regulations to provide further information about Exchange requirements and operation, there are several specific provisions in the ACA that states must consider if they choose to establish and run their own Exchanges or participate in a regional Exchange.

The ACA requires participating states to establish an American Health Benefit Exchange, which is aimed at facilitating individuals' purchase of health insurance. In addition, states must establish Small Business Health Option Program (SHOP) Exchanges. SHOP Exchanges, by contrast, facilitate the enrollment of employees of “small” employers into “qualified” health plans.⁸ States may, at their option, choose to merge their individual American Health Benefit Exchange and SHOP Exchange. However, to do this, the state must be able to demonstrate to HHS that it is adequately resourced.⁹ States also must decide whether to establish their Exchange(s) as a governmental body (e.g., independent agency or as an office within an existing governmental agency) or as a private nonprofit organization.¹⁰ Under the ACA, an Exchange must carry out certain functions. An Exchange must:

• Implement procedures for certifying, re-certifying, or de-certifying health plans;

• Provide for a toll-free telephone hotline to respond to enrollee requests for help;

• Maintain a website where enrollees and prospective enrollees are able to obtain standardized comparative information about health plans;

• Establish a Navigator program using experienced and knowledgeable individuals (who may not work for insurers or be paid by insurers for plan enrollments) to help individuals and small employers participate in the Exchange;

• Inform individuals of Medicaid and Children's Health Insurance Program eligibility requirements in their state “or any applicable state or local public program” and “if through screening of the application by the Exchange, the Exchange determines that such individuals are eligible for any such program, enroll such individuals in such program”; and

• Establish and operate electronically a calculator so enrollees may determine the actual cost of coverage.¹¹

These functions are, in simple terms, designed to allow an Exchange to facilitate individuals' and small groups' purchase of insurance in a way that includes easily comprehensible, accessible, and comparable information. Furthermore, the purchase of this insurance includes premium assistance and tax credits for those who qualify. Exchanges are expected to administer these subsidy arrangements in partnership with the Internal Revenue Service and Department of Treasury.¹²

As noted previously, one of the primary functions of an Exchange is certification of qualified health plans.¹³ Such health plans must meet minimum standards and include “essential benefits,” which HHS will further define through regulation and guidance.¹⁴ The Exchange must rate health plans based upon the plans' relative price and quality.¹⁵ The ACA defines criteria an Exchange must use to certify “qualified health plans” to participate in the Exchange.¹⁶ Among other things, qualified health plans must disclose to the Exchange, HHS, and the state insurance regulator “transparent” information about the financial operations of the health plan, including claims payment policies and practices, enrollment information, rating practices, and cost sharing.¹⁷ The ACA includes additional requirements with respect to qualified health plans. Notably, the plans must:¹⁸

• Meet minimum marketing requirements and not employ marketing practices or benefit designs that have the effect of discouraging the enrollment in such plan by individuals with significant health needs;

• Ensure a sufficient choice of providers (in a manner consistent with applicable network adequacy provisions under §2702[c] of the Public Health Service Act), and provide information to enrollees and prospective enrollees on the availability of in-network and out-of-network providers;

• Include within health insurance plan networks those “essential community providers” where available, that serve predominantly low-income, medically underserved individuals, such as health providers defined in §340(B) of the Public Health Service Act, and providers described in §1927(c)(1)(D)(IV) of the Social Security Act;

• Be accredited within their local markets by an entity recognized by the HHS Secretary for its performance on the standardized Consumer Assessment of Healthcare Providers and Systems survey, as well as consumer access, utilization management, quality assurance, provider credentialing, complaints and appeals, network adequacy and access, and patient information program;

• Implement a quality improvement strategy as defined in [the Act];

• Utilize a “uniform enrollment form” that takes into account criteria the National Association of Insurance Commissioners develops and submits to the Secretary;

• Provide information to enrollees and prospective enrollees, and to each Exchange in which the plan is offered, on any quality measures for health plan performance endorsed under the Public Health Service Act; and

• Report pediatric quality performance reporting requirements under §1139 of the Social Security Act.

These minimum requirements are designed to enable individuals to make comparisons about plans with uniform, transparent information that has been validated, while simultaneously protecting against adverse selection by plans either by benefit design or provided network structure.

Two final noteworthy aspects of the Exchange include a requirement that all Exchange plans must comply with the Mental Health Parity requirements¹⁹ and that any additional state benefit mandates that exceed those issued as “essential benefits” by HHS must be paid for by the state.²⁰

IMPLICATIONS OF THE EXCHANGE FOR PUBLIC HEALTH POLICY AND PRACTICE

Most public health professionals are familiar with the “public health” and “prevention” provisions of the ACA, which establish a National Prevention, Health Promotion, and Public Health Council and Prevention²¹ and Public Health Fund.²² However, the establishment and operation of Exchanges will likely result in a significant shift in the provision and payment of health care, particularly in states with high rates of uninsurance or underinsurance, that will also affect public health and the operation of public health departments in a number of direct and indirect ways.

First, the significant increase in the number of insured individuals is expected to create challenges for the health-care workforce, particularly the primary care workforce. Moreover, many of those who will be newly insured through state Exchanges have, in all likelihood, been using traditional community-based providers such as community health centers and public health clinics. Consequently, both providers and participating plans must formulate collaboration strategies to aid access.

Second, at the time of this writing, the precise structure and nature of the essential health benefits requirement was still unclear. At the request of HHS, the Institute of Medicine (IOM) has launched a study that will culminate in recommendations on the “criteria and “methods” for determining the Essential Benefits package.²³ HHS will use IOM's recommendations to issue regulations and guidance to states. The structure and definition of essential health benefits can be expected to produce a ripple effect through public health, as access is opened to both preventive treatments and health-care services necessary for managing serious and chronic physical and mental health conditions. In addition, public health agencies may be called on to furnish services and supports that are essential to enabling access to high-quality health care but not included in the essential benefit package.

Third, an expanded health insurance market inevitably will lead to changes in the nature and mission of public health agencies. Historically, public health agencies have played roles in both the detection and management of specific diseases and conditions such as cardiovascular disease, communicable diseases, and cancer detection. As the health insurance market expands through a combination of Exchange coverage and Medicaid reforms, an additional 32 million people are expected to gain coverage. Indeed, in California alone, more than three million people are expected to enroll in insurance through the state's Exchange.²⁴ Because essential health benefits will include at least basic health-care screenings and prevention services receiving an A or B certification by the U.S. Preventive Services Task Force,²⁵ public health screening, assessment, and case management resources available through public health agencies as members of health plan networks may be particularly important.

Fourth, the ACA places significant data obligations with the Exchange and qualified health plans. These data requirements ultimately can be expected to provide health departments with far more information about population health and the effectiveness of health-care interventions for both the general population and populations at greatest risk for health disparities. How public health agencies put this new information to work, by using the ACA's considerable prevention resources and developing collaborative arrangements with Exchanges, can be expected to become a defining feature of public health practice.

Finally, the Exchange presents an opportunity for public health agencies to partner with insurance markets on health promotion and disease prevention. The Exchange website requirements open a new avenue of communication between public health and the population and a tool for health information that goes well beyond information related to the selection of qualified health plans. Public health agencies may wish to begin focusing, at this early developmental stage, on the health promotion communication possibilities created by Exchange websites. The federal funding available for developing website communication mechanisms represents a key leverage point, a means of expanding Exchanges' communication potential beyond coverage and care and into the realm of broader matters of population health.