Getting Connected

TMA Backs Bill to Set Up State Health Insurance Exchange

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Legislative Affairs Feature – April 2011

Tex Med. 2011;107(4):37-40.

By Ken Ortolon
Senior Editor

State Rep. John Zerwas, MD (R-Richmond), describes himself as a "vocal" critic of the health system reform law Congress passed last year.

"There's probably nobody that's more vocal in terms of being opposed to the federal health bill than me," the anesthesiologist-turned-lawmaker said.

So it is ironic, then, that he now finds himself sponsoring legislation that would implement one aspect of the Affordable Care Act (ACA) in Texas.

In January, Representative Zerwas filed House Bill 636 to create the state health insurance exchange mandated by ACA. Under the federal law, states must establish such an exchange or the federal government will do it for them.

The exchange would provide a mechanism for individuals and small employers to shop for health coverage from qualified health plans offering a standard benefit package. The exchange would allow "one-stop-shopping" for consumers to purchase health coverage and easily compare the various insurance options available.

While he "remains hopeful" that federal courts will declare ACA unconstitutional, he believes Texas cannot wait for the U.S. Supreme Court to decide. A court decision is not expected until 2012, and the exchange must be operating by Jan. 1, 2014. The legislature meets only every other year, so the 2011 session may be lawmakers' only chance to act on the issue, he says.

Representative Zerwas says Texas needs to move forward with the exchange if it does not want the federal government to take control of a potentially sizable segment of the state's health insurance market.

"That's a frightening thought in my world that we would cede something that large and that important to the federal government," he said.

And, an unlikely coalition of interest groups including the Texas Medical Association and groups representing Texas business leaders, hospitals, and health plans agrees. In January, they wrote lawmakers, urging action this year to create a state health insurance exchange.

"I think that everybody realizes that a big piece of health system reform – if not the biggest piece – is insurance reform," said TMA President Susan Rudd Bailey, MD, who signed the letter on behalf of TMA. "And whether or not the Affordable Care Act gets repealed or struck down by the Supreme Court, there has got to be a better way for patients to find health insurance. Setting up an exchange in Texas with or without the Affordable Care Act might be one way that patients can find coverage that's more affordable and that's not linked to their employment."

Making the Connection

Representative Zerwas says his decision to file HB 636 came from the work of the House Select Committee on Federal Legislation, which he chaired before this year's legislative session. He says the committee's report made it clear lawmakers needed to act this year if they want to maintain state control over the bulk of Texas' individual and small employer health insurance market.

HB 636 creates the Texas Health Insurance Connector to be the health insurance exchange for the state. The quasi-governmental entity would be governed by a seven-member board that includes five members appointed by the governor, as well as the Texas insurance commissioner and the executive commissioner of the Texas Health and Human Services Commission, both of whom would be nonvoting, ex officio members.

Of the five members appointed by the governor, two must be chosen from a list recommended by the lieutenant governor and two from a list recommended by the speaker of the House of Representatives. At least three of the five must have experience in health care administration, health care economics, or health insurance. At least one member must represent consumers, one would represent small employers, and one must be an enrollee or qualify to be an enrollee of a qualified plan in the connector.

In an opinion article published in the Houston Chronicle in January, Representative Zerwas said the connector would provide managed competition among health insurers offering standard coverage. That would make it easier to compare policies, establish uniform rules for pricing, and offer consumers the ability to select a policy that meets their coverage and budget needs.

"Through the connector, comparing and selecting health coverage could become as easy as shopping for your travel arrangements on one of the Internet-based travel services," he wrote.

Among the connector's required functions is creating a website through which prospective enrollees could obtain standardized, comparative information about the health plans and find comparative coverage information.

The connector would assign a rating to each plan based on criteria developed by the U.S. secretary of health and human services and use a standard format for presenting information concerning plan options to enrollees.

The connector also would help eligible individuals enroll in Medicaid, the Children's Health Insurance Program (CHIP), or other state, federal, or local health benefit programs.

Finally, the connector would have to make available electronically a calculator to determine the actual cost of coverage after the application of any premium tax credit or cost-sharing subsidy available under ACA.

Joining Odd Bedfellows

Support for the health insurance exchange brought together an unlikely coalition of advocacy groups that rarely agree on issues before the legislature. That group wrote a letter to lawmakers on Jan. 7 urging creation of an exchange.

"While we are sensitive to the fact that there are differences of opinion regarding national health insurance reforms, we feel that it is in the best interest of the state of Texas and its citizens to pass legislation addressing and governing an exchange during the 2011 legislative session," the groups wrote. "We strongly believe that the creation and administration of the Texas Health Insurance Exchange should be the responsibility of our state government. The exchange design should not be left to the federal government, which will be the ultimate consequence if the Texas Legislation fails to act."

Representatives of TMA, the Texas Association of Business, the Texas Hospital Association, the Texas Association of Health Plans, the Texas Conservative Coalition Research Institute, the Texas Association of Life and Health Insurers, and the Texas Restaurant Association signed the letter, which also went to Gov. Rick Perry and Lt. Gov. David Dewhurst.

Dr. Bailey says the groups came together to support the exchange because they believe it is better for Texas to govern its health insurance market than to leave it up to the federal government.

 "I congratulate Dr. Zerwas for understanding that we've got to get to work on these things now because in two years it may be too late, and the federal government may be doing it for us," she said.

The groups recommended that the exchange operate as a nonprofit organization rather than a state agency. Dr. Bailey says an independent, nonprofit exchange "will be much more stable in the long run and less dependent" on government funding to stay in operation.

The groups also urged that:  

  • All qualified health plans be allowed to offer coverage through the exchange rather than allowing the government to dictate which plans would be available through the exchange;
  • Health insurance carriers not be required to participate in Medicaid or CHIP to be part of the exchange; and
  • Hospitals, physicians, and other providers not be required to participate in exchange plans, Medicaid, or CHIP as a condition of licensure.

Flexing the Gubernatorial Muscle

Representative Zerwas says there is considerable support for HB 636 in the Texas House, and he has lined up a bipartisan group of cosponsors, including at least two members of the House Insurance Committee, the panel that likely will hear the bill.

But his bill may be getting some pushback from Governor Perry. In February, he joined 20 other Republican governors in urging U.S. Health and Human Services Secretary Kathleen Sebelius to make six "critical adjustments" to the rules for the exchanges.

Among those changes are granting states authority to choose benefits that meet the needs of their citizens, waiving provisions that discriminate against consumer-driven health plans, and commissioning an independent assessment of how many people will be offloaded into the exchanges by employers.

Without those changes, the governors threatened to oppose creation of health insurance exchanges in their states, leaving the matter to the federal government.

"We believe in its current form the law will force our health care system down a path sure to lead to higher costs and the disruption or discontinuation of millions of Americans' insurance plans," the governors wrote, adding that the ACA is "seriously flawed, favors dependency over personal responsibility, and will ultimately destroy the private insurance market.

"Because of this, we do not wish to be the federal government's agents in this policy in its present form," they said.

Ken Ortolon can be reached by telephone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by e-mail.

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