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Iowa Exchange – Heavy Lifting (Required)

The votes have been cast, counted and duly noted for the next few years. From this election, we now have more certainty that the Patient Protection and Affordable Care Act (PPACA) – “Obamacare” to many – will survive into the future. Now the heavy lifting must begin…and quickly.

Under health reform, every state must have an approved health insurance exchange by January 1, 2014. Exchanges are competitive marketplaces for individuals and small employers (initially under 51 employees, but moving up to 100 employees by 2016) to directly compare and purchase private health insurance options based on price, quality, and other factors.  For those individuals who qualify, federal subsidies will be provided to keep health insurance affordable.

Until recently, states had until November 16 of this week to notify Health and Human Services (HHS) of its’ intent to either establish a local exchange or defer to a federal exchange. Iowans will be able to enroll in health exchanges next October for coverage starting in January 2014. Last Friday, the Obama administration extended the deadline for states to submit plans to HHS by December 14 (for states who wish to run their own exchanges) – or February 15, 2013, for states that want to run exchanges in partnership with the federal government (also known as a State Partnership Exchange).

Much work is needed for Iowa to establish an exchange. Unfortunately, waiting for the Supreme Court ruling in late June and the November elections have stunted any real progress on performing key functions to make a state-based exchange possible in Iowa for a 2014 implementation date. In addition, the administration has yet to release crucial regulations and guidance to establish exchanges. Such guidance is expected soon, however.

So what will Iowa do?

Iowa has three options:

  1. Develop a “State-based Exchange”
  2. Defer to a “Federally-facilitated Exchange”
  3. Elect a “State Partnership Exchange” (a hybrid of #1 & #2)

Developing a State-based Exchange customized to specific Iowa insurance issues, is both complex and laden with minefields. Making hasty, ill-conceived decisions may cause havoc in the Iowa insurance market. (This discussion must be left for a future blog.)

Electing the Federally-facilitated Exchange is perhaps the least onerous of the three options currently available. However, deferring to a federal exchange abrogates local control. Many argue that Iowa has unique insurance market issues that require local and flexible solutions, not inflexible federal control. Because of this, Iowa will most likely refrain from embracing the full federal exchange.

By default, the State Partnership Exchange may be the most logical choice for Iowa – at least for 2014. Once Iowa has had time to perform necessary due diligence on establishing its’ own exchange, the Partnership Exchange can then be replaced with a home-grown model that makes sense for the Iowa insurance market.

Unique challenges are usually solved with unique solutions – solutions that require input from stakeholders who are most familiar with the local market. It is now time for some heavy lifting.

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  1. Anne Kinzel says

    While I certainly agree with your analysis regarding Iowa’s opportunities, I am very disappointed that the Branstad administration, which has accepted considerable money from the Federal government to study the exchange issues, has done so little of what is needed to make the most rational choice among the three options. Furthermore, I wish the state would consider the possibility of developing a regional exchange with neighboring states. A larger market might be an interesting option of central US health care consumers.

    Our health care problems are immense and very complicated. We need calculated boldness, now.

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