Colorado Health Insurance Exchange in Dispute
What will be the face of health care reform to you? For more than 1 million Coloradans, it may be the proposed health insurance exchange.
The exchange is to be a staffed website where people can find simplified comparisons between policies, government subsidies and competition that may lower prices.
The exchange also would be the mechanism for delivering subsidies created by the new federal health care law. A family of four, headed by a 30-year-old with an annual income of $40,000 that purchases insurance using the exchange is projected to see a subsidy of $677 a month starting in 2014.
The Colorado legislature is considering a proposal to create this exchange. Republicans are lining up along party lines to fight it, despite broad support for a bill that was originally considered non-partisan.
State Sen. Shawn Mitchell, R-Broomfield, is a leader of the opposition, called the exchange “the cogs and spokes and drive train” of the new federal healthcare law, which Republicans oppose. He said he’d rather see a “paring of the jungle” of laws and rules, which he says are making a mess of U.S. health care.
Republican opponents of the federal law are seeking to overturn it in the courts or through the next election.
Opposition to the Colorado exchange bill puts the Republican Party sharply at odds with traditional allies who support it -- including the Colorado Association of Commerce and Industry, the Denver Chamber of Commerce and many health insurance companies.
Loren Furman, vice president of government relations for the Colorado Association of Commerce and Industry, said her members think the exchange is a terrific idea that will increase competition.
Health insurers also back the bill. Rebecca Weiss, director of government relations for Anthem Blue Cross and Blue Shield, said her company sees the exchange as a new sales channel, as well as a practical way to process the subsidies.
Sen. Morgan Carroll, D-Aurora, said testimony has shown business and consumer groups believe the exchange will drive down insurance costs by making prices clearer, policies easier to buy, and by putting hundreds of thousands of people in one risk pool.
The exchange will be open to people buying individual healthcare insurance, and to Colorado companies with up to 50 employees. That’s about 600,000 people who have insurance now, plus about 700,000 who don’t.
So what is the exchange? One state, Wisconsin, has created a site where consumers can check out how such a system might work.
The Wisconsin site is only a prototype – and Colorado would create its own exchange if this bill is approved. But you can see the components of how it would likely work on the Wisconsin website: You select one of five example consumers or families that most closely matches your own situation. The exchange then asks you to rank what’s important to you, including factors such as low cost, using your own doctor, good customer service.
The Wisconsin site then provides a simplified choice of policies, along with an instant calculation of the government subsidy and the new prices of each insurance policy.
The federal health reform law will further simplify the choices. A person looking for health insurance would select from just five categories – not the thousands of different policies that are currently available. The basics of the policies in each category would be the same, allowing apples-to-apples type comparisons. After selecting a category and price range, the consumer could check for add-ons to the basic policy, said Dede de Percin, executive director of the Colorado Consumer Health Initiative.
“The main purpose is to organize the health insurance marketplace to make it easier to select a plan,” said Joan Henneberry, Colorado’s director of health insurance exchange planning.
De Percin described the exchange as a needed simplification of a bewildering confusion of too many choices.
Opponents also say that simplification is really a limit on both consumers and insurers.
Colorado state Sen. Kevin Lundberg, R-Berthoud, said there are plenty of websites that already allow consumers to comparison shop. The one he cited and many others, don’t have a simplified apples-to-apples style comparison because that will exist only if the federal law remains in place and requires insurers to sell policies with identical basics.
Lundberg disliked that the proposed exchange “is a mechanism for providing subsidies and moving people into entitlement programs,” referring to Medicaid, Medicare, and other government health insurance programs.
Colorado doesn’t have a prototype website yet. But if you’d like to know what your subsidy might be if the healthcare law remains in place, Kaiser Health Foundation has created a calculator online where you can find out. You have to guess at your 2014 income, and the calculator makes an assumption about what price level of insurance you’d choose. Colorado has “medium” health insurance rates, so plug that into the calculator.
The subsidy would be paid directly by the government to your insurer, to reduce your monthly insurance payment, said Henneberry.
Under the health care law, some small businesses buying on the exchange will get subsidies too. Details can be found at the IRS website.
If the federal healthcare reform law is eliminated, state lawmakers would have to decide if they want simplified health insurance, Henneberry said. But without the subsidies in that law, hundreds of thousands of Coloradans would find insurance too expensive, she said.
Currently, 88 percent of Coloradans without insurance say it costs too much, according to a survey by the Colorado Health Institute. The Congressional Budget Office estimates that more than 80 percent of people who buy insurance on the exchange will receive a subsidy.
Henneberry said Colorado expects insurance companies to continue to sell policies outside the exchange as well.