Health Reform Regulations for Exchanges: A Level Playing Field for Small Business and Individuals

While the Capitol is abuzz on debt limit talks, the important work of implementing far reaching reforms enacted under President Obama continues. Secretary of Health and Human Services, Kathleen Sebelius, announced new draft rules for insurance companies to participate in the new health insurance exchanges to open in 2014. In her announcement message, Sebelius laid out the need for regulating insurance companies so that they compete on the basis of price and quality, rather than screwing small businesses and individuals.



The HHS released proposed rules yesterday on standards for the establishment of the insurance exchanges under the Affordable Care Act. While the rules provide flexibility to states to set up and operate exchanges that will not only enroll people in private insurance plans but provide information and enrollment for Medicaid, SCHIP and other public programs as well, (and make clear that if a state should refuse to do so, the federal government can and will operate that state's exchange), the two big components of the rules regulating the insurance exchanges were: giving small businesses an even playing field when it comes to attracting talent and offering health insurance, and giving people in the individual market the tools to compare and choose plans that are right for them.

Giving Small Business An Even Playing Field

Right now, small businesses can already get a tax credit of 35% for offering health insurance to their employees. In 2014, as the exchanges open, benefits for small business get even better:
  • Small businesses that participate in Small Business Health Options Programs (SHOPs) will get a 50% credit if they offer to pay at least half of their employees' premiums.
  • Small businesses will be able to pick a range of plans from the Small Business Health Options Program, available through the exchanges, and provide a competitive range of choices (rather than the one or two plans they are often limited to today if they can offer coverage at all) for their employees, and write just one check.
  • Businesses with less than 100 employees will be eligible, although states can limit participation to businesses with 50 or less employees.
Unlike the current marketplace, a SHOP will:
  • Guarantee small businesses a choice of qualified health plans to offer to employees.
  • Require health insurers to give you detailed information about the prices, benefits, and quality of their qualified health plans, in a format that lets you easily make “apples to apples” comparisons between qualified health plans.
  • Post quality information and the price for each qualified plan on the Exchange website, along with the results of consumer satisfaction surveys.
  • Consolidate billing so you can offer workers a choice without the hassle of contracting with multiple insurers.
Small business will have these choices and plans to offer to their employees without the hassle and added administrative costs of negotiating rates (which will be done through the exchanges), having multiple bills (they can just write a single check to the exchange), having to do all the enrollment paperwork. Insurance companies will no longer be able to shaft small businesses who want to do right by their employees.

Small business is the engine of our economic growth, and yet today, they lose talent to large companies that can afford to offer better health insurance plan. Imagine the possibilities of growth and innovation of small business is able to better retain talent who will no longer have to leave because of the poor health insurance choices of their employer even if they love their jobs.

Giving Individuals the Tools to Make Smart Health Insurance Choices

The second big component of the new rules cover individuals. The ACA aims to finally even the playing field for consumers as well, and those who are self employed or work for businesses that do not offer insurance. The first step to making an informed choice is, well, information. ACA provides, via the exchanges, to Americans the same affordable choices available to our members of Congress at taxpayer expense. To that end, the exchanges will be a one-stop-shop for consumers for the following range of operations:
The main functions of an Exchange, laid out in the Affordable Care Act, include:
  • Certifying, recertifying, and decertifying health plans offering coverage through the Exchange, called qualified health plans;
  • Assigning ratings to each plan offered through the Exchange on the basis of relative quality and price;
  • Providing consumer information on qualified health plans in a standardized format;
  • Creating an electronic calculator to allow consumers to assess the cost of coverage after application of any advance premium tax credits and cost-sharing reductions;
  • Operating an internet website and toll-free telephone hotline offering comparative information on qualified health plans and allowing consumers to apply for and purchase coverage if eligible;
  • Determining eligibility for the Exchange, tax credits and cost-sharing reductions for private insurance, and other public health coverage programs, and facilitating enrollment of eligible individuals in those programs;
  • Determining exemption from requirements on individuals to carry health insurance, granting approvals to individuals relating to hardship or other exemptions; and
  • Establishing a Navigator program to assist consumers in making choices about their health care options and accessing their new health care coverage, including access to premium tax credits for some consumers.
Note these regulations carefully. They may look like nothing at the beginning, but the exchanges are not merely a place where private insurance gets to come and throw plans out there and confuse customers into picking plans that ultimately won't work for them. In order to be certified by the HHS, exchanges will need to ensure that at a minimum, their qualified private health plan criteria match with that prescribed in the law and cover a broad range of services and all medically necessary procedures. States can add requirements, but cannot take them away. On top of that, exchanges will not simply facilitate participation in private plans but also in public plans for those who are eligible for Medicaid, SCHIP or another public insurance plan.

In other words, the exchanges are designed to give the individual the full range of health insurance choices available to them: public and private, along with cost and coverage information for an "apples to apples" comparison. Consumers will be able to get information via phone, the Internet, a local office, or an organization specializing in choices and without conflicts of interest with health insurance companies.

The goal of the HHS in these new rules seem to be two-fold: first, strengthen the employer based system by giving small businesses the same range of options that are enjoyed by corporate behemoths. Second, ensure that individuals can make the best choices for themselves, make the right comparisons and obtain the help they need.

This is a two-fer, in that it will not only make sure that people can get the coverage they need, but also become more free in making career choices. It will provide people the freedom to work for local businesses that serve the local economy and still cover themselves and their families with health insurance. For those who want to take the leap and start their own business (whether they want it to be a growing company or simply work for themselves in a home-based business), the exchanges will give them the freedom to do just that without having to worry about going without health care. That's what "ObamaCare" is going to do for Americans, and I am damn proud to have supported it!