Colorado exchange could change a little or a lot under waivers
Sunday, June 21, 2015
A bipartisan effort is underway in Colorado to allow lawmakers to change how the state’s health insurance exchange works — but there’s disagreement over whether it needs minor tinkering or a complete overhaul.
A section of the Affordable Care Act allows states to apply for waivers from certain parts of the landmark health care law’s provisions beginning in 2017.
Sen. Ellen Roberts, R-Durango, and Sen. Irene Aguilar, D-Denver, have expressed interest in looking at waivers — Section 1332 of the act — as a way to improve Connect for Health Colorado, the state’s health insurance marketplace.
Roberts, who leads the Colorado exchange’s legislative oversight committee, recently formed a seven-member working group to mull over innovation waivers this summer.
“We don’t have any time to lose if we are going to make legislative changes,” she said.
Democrats talk about tweaks, while Republicans have advocated for big changes, up to and including repeal of the state exchange and Obamacare. But other Republicans want to strategize in case the act survives. They don’t necessarily want to abandon the state exchange if the alternative is the federal version.
States will have the authority to seek exemption from the ACA’s individual mandates, from employer penalties for not providing coverage and from benefits considered part of comprehensive coverage.
States could toss out their exchanges and take an entirely different tack. As long as federal authorities agree states can meet the primary goals of the act — more insured, comprehensive coverage and affordable premiums — states still get the subsidies.
For example, a state could take all the federal money available to subsidize health insurance premiums, co-pays and tax credits for small businesses and use it to pay for a coverage plan of its own design.
Colorado is one of 14 states that, along with the District of Columbia, chose to run their own marketplace. But the exchange just survived a bruising second enrollment period that saw roughly 10 percent of applicants snared in technical hang-ups that took months to resolve.
“Consumer confusion and frustration are a widespread thing across most of these exchanges,” said Dick Cauchi, health program director for the National Conference of State Legislatures.
And questions about the exchange’s financial sustainability loom large now that federal startup grants have ended.
Unrest is widespread. This year, according to a March 6 analysis by the NCSL, at least 11 states have proposed bills to end their state-run exchanges or prohibit forming them. And at least 10 states have proposed bills to convert their federally facilitated marketplaces into state-run or state-federal partnership exchanges.
In late January, 24 Colorado Republicans legislators unsuccessfully sponsored a bill to repeal the state exchange, which had been created by a bipartisan effort in 2011.
Jonathan Lockwood of Advancing Colorado, a free-market advocacy group, said although he opposed the ACA, the time for “stomping your feet and calling for repeal” is probably over. “At least with running the exchange at the state level, we have been able to keep tabs on what is going on.”
Many think a state exchange beats the alternative.
“I still think we’re better off in Colorado with a state-based exchange,” said board member Steve ErkenBrack, president of Grand Junction-based Rocky Mountain Health Plans. “When problems arise, we can fix them at the state level. We set this up to be a marketplace, not a government entity. The consumers want it. The carriers want it.”
It’s unclear in Colorado, as it is for most of the state-based exchanges formed under the ACA, what kind of exchange will survive the loss of heavy federal funding and political fallout.
“States can use the waivers to chip around the edges — it can be a small tweak — or to make big changes,” said Jeff Bontrager, the Colorado Health Institute director of research on coverage and access. “But they need to start their planning processes if they want to be out of the gate in 2017. The way we read it, though, there is no deadline. A state could decide … and apply down the road, if the ACA and its subsidies still stand as the law.
To qualify for an innovation waiver, the state must establish that its reform plan would provide good coverage at affordable rates, and Roberts said convincing federal authorities of that will be the hard part. But she’s ready to get the ball rolling.
“Its our reading of the law that legislation would be needed to grant the state authority to apply for the waiver,” Bontrager said.
A state that is granted a waiver can fund reforms using the amount of federal funding that otherwise would have been paid out in the state for premium tax credits, cost-reduction payments and small-business tax credits.
Vermont was the first state to announce it wanted a 1332 waiver. It looked at creating a single-payer system. The state since has found the plan is too costly — pricier than the $275 million it would have under ACA.
Other states looking at proposals include Hawaii, New Mexico, Arkansas and Minnesota, Bontrager said.
There is wide latitude under the waivers to retool reform, but legislators, while they could modify benefits, couldn’t do away with the ACA’s basic goals, such as protection for people with pre-existing conditions.
But states could reduce or eliminate penalties on the uninsured and on businesses that don’t offer coverage.
States could find different ways — such as vouchers or savings plans — to subsidize plan premiums other than the confusing tax credits in place.