State vs. Federal Health Exchanges: Where Should Nonprofits Stand?

December 15, 2012; Source: Watch This (Bryce Williams Blog)

Momentous decisions about the shape of health insurance coverage are being made daily, and most of them are of great importance to the nonprofit sector in terms of the roles nonprofits will have to play to fulfill the mandate and promise of the Patient Protection and Affordable Care Act (PPACA, or ACA). It sometimes feels like the decisions various state players are making about PPACA implementation are discussed in the mainstream press as political decisions. Much of the media looks at who’s for and who’s against President Barack Obama’s plan, rather than whether decisions make sense in policy terms. At least that’s what Bryce Williams believes when it comes to decisions of state governments about the ACA exchanges. Williams is the founder of Extend Health, a Medicare exchange helping “retirees choose the individual Medicare plan that meets their medical needs and budget.”

Per the ACA, states have until December 31, 2012 to tell the federal government whether they will run their own health insurance exchanges, designate or create a nonprofit to run their exchanges, or simply pass and hand the responsibility off to the federal government. As of 2014, the exchanges will be the marketplaces where individuals and employers with up to 100 employees will be able to purchase health insurance coverage that meets the mandates of the ACA. After 2017, states will be permitted to allow employers with more than 100 employees to select insurance through the exchanges.

If you know the nonprofit sector’s employment characteristics, you know how important the exchanges will be to nonprofit establishments with small staffs. Of the 498,329 nonprofit establishments with employees that were counted by the Agency for Healthcare Research and Quality, 247,281 had less than ten employees, 66,640 had between 10 and 24, and 60,997 had between 24 and 99 employees. In other words, three out of every four nonprofit agencies that employs people would qualify to purchase insurance through the exchanges.

We presume that national nonprofit trade associations and state nonprofit associations are closely monitoring the actions of the states regarding exchanges to make sure, at a minimum, that nonprofit interests are protected and, more broadly, to protect the interests of lower income families and communities that need insurance coverage. Williams writes about the decision of Gov. Chris Christie (R-N.J.) to veto legislation that would have created an exchange in the Garden State. That doesn’t mean that the residents of Jersey City, Newark, Trenton, and Atlantic City won’t have access to health insurance. Rather, Christie’s decision to punt on the exchange means that, under the ACA, the federal government will operate the exchange for New Jersey.

But despite observers who see Christie’s action as part of a groundswell of opposition to the ACA, Williams suggests that Christie is just being pragmatic, given that it is a huge undertaking to set up an exchange from scratch. For those states that are running their own exchanges, those likely to turn out successful will be the states that have been working on their exchanges long before the January 2013 deadline. For “Obamacare” opponents looking to see the health exchange decisions of states such as Tennessee and New Jersey as political statements designed to undermine and topple the ACA, Williams tells his readers that that ship has sailed. Obamacare is the law and is not going to be overturned, given the November 6th election results.

Having established his own for-profit Medicare health exchange in 2004, Williams is aware of the challenges, which he summarizes in one paragraph:

“There is the underlying technology and the crucial relationships with the health insurers that will offer plans in the exchange. There is the initial consumer outreach, education and support while consumers are evaluating and choosing plans and enrolling. There are the complex eligibility requirements that some individuals must meet to receive federal subsidies. Lastly, there is the reality that the newly insured will move between company, Medicaid and individual coverage at frequencies never before seen or managed.”

For those reasons, Williams sees it as pragmatic for states to let the feds run their exchanges. For nonprofit sector employers and employees, is there no difference between exchanges run by the states versus those run by the federal government? Should nonprofits sit back and simply let the exchange cards fall as they may, or are their state and national associations monitoring the states’ decisions and giving their members advice regarding where they should stand on state-controlled versus federally-controlled exchanges? —Rick Cohen