State examining ways to keep feds away from insurance plans

Despite challenges from critics, Colorado’s Health Benefits Exchange is on track to start offering insurance plans in October 2013, as scheduled.

The exchange was created during the last legislative session by Senate Bill 200, and organizers are quick to distance it from the Affordable Care Act, which Colorado is challenging in the courts.

This is something the Colorado legislature decided to do on its own, said Myung Oak Kim, spokeswoman for the Colorado Health Benefit Exchange.  Kim said it was a suggestion set up by the 208 Commission, a state-sponsored commission on how to lower health care costs.

While the exchange might be Colorado’s own version of a new health care marketplace, it currently depends on federal money from the Affordable Care Act to keep it going. And that’s where the latest challenges to its creation occur.

The state was preparing to apply for a $22 million grant that would allow the exchange to continue its work through 2012. It missed one of the deadlines, Sept. 30, over language that some members felt tied it too closely to federal reform. It has a chance in December to apply for those same funds.

Some believe that the state was right to pass up federal money because it gives Colorado the chance to create its own exchange, not one tied to federal law.

“We want something that’s right for Colorado,” said Tony Gagliardi, executive director of the Colorado branch of the National Federation for Independent Business. “We don’t want the Feds to take charge.”

But the delay highlights one problem with the exchanges. Even though the Colorado exchange has wide bipartisan support, as well as the support of insurance companies and businesses — it suffers from being tied to the federal health overhaul law.

For instance, the NFIB sees exchanges as a way for small and micro-businesses to gain access to the market. But the group is joined 27 states that are opposed to the federal requirements.

“This is what Colorado businesses need,” he said. “Who knows what the federal government is going to do?”

While federal law gives some small businesses tax incentives for signing up for insurance in the exchanges, that’s not why NFIB members are excited about the exchanges.

“For them, it’s about price, competition, clarity,” Gagliardi said. “That’s what most of our members see. It also gives them a chance to stop tying employment to health insurance. They can give their employees x amount of dollars and the employees can go to the exchange. “

Small businesses stand to benefit greatly from the exchanges, Kim said. As of Oct. 2013, businesses with fewer than 25 employees making less than $50,000 a year will be able to gain access to insurance companies wanting to sell them policies. And, they’ll receive up to 50 percent of their premiums back on their federal income taxes, starting in 2014. Nonprofit organizations will get a 35 percent federal tax break.

The plan has the support of small businesses, exchange officials said, but others believe few small businesses will benefit.

But Gagliardi said, under the federal guidelines, fewer than 12 percent of small businesses are eligible for the tax credit. But they are still interested in the exchanges, in the hope it will save time and money, he said.

Small businesses aren’t the only ones in favor of the exchanges. Smaller insurance companies, struggling to gain market share from giants like Anthem, will see a more level playing field, according to a monthly newsletter, “Inside Health Insurance Exchanges” that looks at the efforts all 50 states are making toward meeting the federal requirements.

Larger insurance companies tend “not to love” exchanges, reports the newsletter, because they aren’t used to competing on the same playing field. Smaller plans get to be more aggressive.

Colorado’s exchange — which will consist of a website, a telephone hotline and navigators to guide less tech-savvy people through the system — will allow insurers to compete based on product and price, not just name recognition. Federal law requires HHS to develop a rating system for health policies. While not yet created, the ratings will be based on premium costs, payment policies, enrolment, claim-denial rates and financial soundness of the company. Those ratings will level the playing field for insurers, analysts say.

But first Colorado has to get to Oct. 2013. That’s when the exchange will be open for business, with individuals and small businesses able to apply during an open enrollment period. Those policies won’t start until Jan. 2014.

The exchange board is moving slowly, said Gagliardi, and that’s the right thing to do.

“This is all very new,” he said. “It’s new to business, it’s new to Colorado. So we have to make sure we’re doing this the right way. That’s why they’re moving slowly — to make sure we have a good foundation under us to start off with.”

Since they were first suggested, health exchanges have drawn fire from critics. Everything from the make-up of the board — too many insurance reps — to the salary suggested for the soon-to-be-hired executive director — far too high — has been criticized.

Small business and health exchanges

If you have up to 25 employees, pay average annual wages below $50,000, and provide health insurance, you may qualify for a small business tax credit of up to 35 percent — 25 percent for nonprofits — to offset the cost of insurance.

Under the health care law, employer-based plans that provide health insurance to retirees ages 55-64 can now get financial help through the Early Retiree Insurance Program. This program is designed to lower the cost of premiums for all employees and reduce employer health costs.

Starting in 2014, the small business tax credit goes up to 50 percent (up to 35 percent for non-profits) for qualifying businesses. This will make the cost of providing insurance even lower.

In 2014, small businesses with generally fewer than 100 employees can shop in an affordable insurance exchange, which gives you power similar to what large businesses have to get better choices and lower prices. An exchange is a new marketplace where individuals and small businesses can buy affordable health benefit plans.

Exchanges will offer a choice of plans that meet certain benefits and cost standards. Starting in 2014, members of Congress will be getting their health care insurance through exchanges,

Employers with fewer than 50 employees are exempt from federal laws requiring them to pay a fine if employees get tax credits through the exchange.

(Source: healthcare.gov)