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March 2013 Policy Study, Number 13-3


Just Say NO – and Keep Saying NO – to Federal Health Care Exchanges and Medicaid Expansion


Health Care Exchanges in Iowa



The decision made by Governor Terry Branstad, in conjunction with the Iowa Department of Public Health, the Insurance Division, the Department of Human Services, and the Department of Revenue, requested that the Iowa health care exchange be operated as a federal-state partnership. The state proposed implementing plan management functions and continuing to perform Medicaid and Children’s Health Insurance Program (CHIP) eligibility processing and determinations. The proposal calls for moving to a completely state-based exchange in 2015.[19] The official blueprint was submitted on February 15, 2013, in “the format required by HHS.”


This proposal received “conditional approval” from the U.S. Department of Health and Human Services on March 7, with final approval based on demonstrating readiness to perform all required functions on time.[20]


The Governor tried to establish a position of independence and state control in his December 14, 2012, letter to HHS Secretary Sebelius, stating that the PPACA has not “advanced…important principles” of improved care, lower costs, and a healthier population, and that a state-run health benefits exchange would not address these issues either.


He clearly expressed concerns about control, flexibility, and the regulatory framework of exchanges, as well as implementation costs and said that the “State of Iowa intends to minimize the Federal Government’s intrusion into the regulation of insurance” and to “continue to regulate insurance plans” and “retain control of Medicaid and Children’s Health Insurance Plan eligibility.”


However, by March 2013, language and timelines used by Insurance Commissioner Nick Gerhart in the press release announcing the blueprint submission clearly show that any semblance of state control is quickly slipping away. For example, HHS determines if Iowa’s plan is acceptable and approves the insurance companies offering plans and the benefits of the plans offered – the state has no final determination authority.


Instead of the strong language used in December, the words were keeps “some control” of the exchange in “the hands of the state.”[21]


The alphabet soup of agencies and organizations involved in exchange approval and establishment constitutes a complex and, again, bureaucratically top-heavy implementation process. They include the Iowa Insurance Department (IID), which is responsible for the Qualified Health Plan (QHP) certification. Staff of the IID will use the System for Electronic Rate and Form Filing (SERFF) to do this.


The health insurance companies asking for plan certification (currently two major health insurance companies control most of the plans used in Iowa) will use the SERFF to submit the required information for every plan they offer.


Then the IID will make recommendations about each plan and send them to the national Center for Consumer Information and Insurance Oversight (CCIIO) for actual approval sometime in July. The original timeline was June. The CCIIO is to approve the plans by September 4, originally July. The insurers will then put the plan information into the Federally Facilitated Exchange (FFE) by the end of September, originally August. Consumers are supposed to begin signing up for insurance on October 1, with the first open enrollment period to end next March (2014).[22]


IID will monitor the insurance companies and the care/services they are providing to consumers under the Qualified Health Plans (QHP). As now outlined, IID will work with the national CCIIO on how to best display this information to consumers. IID will also “perform reviews of form and rate filing, network adequacy, and accreditation, licensure, and solvency standards.”[23]


“Navigators” licensed and hired by the State Insurance Commissioner or by the non-profit health benefit marketplace organization proposed by the Iowa Senate will help consumers understand the information provided, what level of subsidy they are eligible for, and help them choose a plan. However, the Navigators are not authorized to be insurance salespeople, only “consultants.”[24]


A subcontractor has been hired to “examine design options” for the Navigator program and “develop a timeline” for implementation.


That is all for the individuals seeking private insurance. And all exchange expenses are to be paid by the exchange, which will be set up as a non-profit, through fees levied on the insurance plans offered. Presumably, these fees will be passed onto consumers.


For the small businesses that are required to provide insurance, there is a completely separate process.


Last November the state commissioned a report to review the Small Business Health Options Program (SHOP) Exchange “statutory, regulator, and administrative” requirements and to “discuss major design and procurement” decisions. According to the Kaiser Foundation Iowa status summary, that report recommended “engaging stakeholders in the small group market as a next step towards developing a specific SHOP exchange design.”[25] So, the taxpayers paid for a report which recommended more research and another report.


Then we have the information technology requirements of Obamacare. The Iowa Department of Public Health does not think their system can be modified to meet the Obamacare requirements and will require significant upgrading and new funding.


As a result, last September a contractor was hired to develop a new Medicaid and CHIP computer system. This is called the Eligibility Integrated Application Solution (ELIAS) project, and will determine the applicants’ eligibility in real-time by “interfacing” with the federal IRS “hub” data to access every applicants MAGI, determine eligibility, and manage “consumer account information.”[26]


ELIAS is part of the partnership aspect and will go away in 2015 when Iowa fully implements the “state-controlled” health exchange. It is still in the design phase and not operational, according to the Kaiser report.


Next there is the part of Obamacare which requires all insurance plans to provide Essential Health Benefits (EHB), unless the plan is grandfathered in. These EHB include the contraception and abortion coverage, which has garnered extensive media coverage.


In lieu of a specific determination, all plans in Iowa must meet the standards of the largest small-group plan currently operating. This is the Wellmark (Blue Cross Blue Shield) – Alliance Select, Preferred Provider Organization plan. Presumably, the IID and CCIIO reviews will ensure all QHP offered through the exchange meet this standard.


In the meantime, the state has received over $35 million in federal grants, which is being spent on the preceding activities.[27]




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