Latest Developments in the implementation of an Illinois Health Benefits Exchange: Senate Bill 1313

Back in the spring, the Illinois General Assembly passed a bill enacting the intent to create a health benefits exchange, a state-wide marketplace called for by the federal Affordable Care Act that will act as a tool to aid consumers to shop for insurance. The exchange has the potential to create a competitive and regulated environment that will keep health insurance costs at reasonable levels, and thus more available to individuals and small businesses, while also making the process of shopping for insurance more straightforward and manageable. In order for the health benefits exchange to operate this way, it is important that the exchange is created with the needs and protection of consumers and small businesses in mind. Earlier this fall, the study committee on the exchange released a report on their findings.  This past week, during the Illinois General Assembly Fall veto session, steps were taken to establish the exchange. State Representative Mautino introduced his amendment (House Amendment 2) to SB 1313, a bill which dictates the makeup of the health benefits exchange governing board.

Decisions that have been made in SB1313, House Amendment 2:

The composition of the health exchange governing board has been outlined in the amendment to SB 1313 in a way that supports a board that is likely to take interest in consumers and small businesses. The board, as outlined in the amendment, will be made of 9 members:

·         2 from the Attorney General’s office

·         1 small business owner

·         1 employee of a small business

·         1 consumer representative

·         1 community-based health care provider who primarily serves individuals under 200% of poverty

·         1 health actuary or economist

·         1 member of organized labor

·         1 individual who qualifies for Medicaid

None of the seats on the board will go to legislators, brokers, or insurers. There are also pieces in the amendment that support the creation of a racially and geographically diverse board, as well as clauses that protect against board members who have conflicts of interest in the governing of an exchange board.

Decisions not made in SB 1313:

The amendment puts the board in charge of deciding how the exchange will be financed.  There are many options outlined in the amendment, some that support the interest of the consumer, such as a fee levied on insurance companies, and some that are less supportive, such as a fee to users of the exchange.

What will happen next:

Now that the bill has been filed, it needs to be approved. On November 8^th, the House Insurance Committee will be holding a hearing to discuss SB 1313.   The Committee has 11 Democrats and 9 GOP members.  In order for the bill to pass the House, it will need to get support from 71 votes, opposed to the normal 60, due to rules of the veto session. If you want to see a health benefits exchange that supports the interests of individuals and small businesses, call your state representative and tell them to vote Yes on SB1313.

It’s Finally Happening

A legislative taskforce is working right now on ways to increase competition in the Illinois health insurance marketplace, and they’ll make recommendations by September 30th. Insurance lobbyists have come to Springfield to prevent anything that might mean more competition and better choices for Illinois consumers. 

Specifically, a Springfield legislative taskforce is considering setting up what is known as an insurance exchange. Done right, this will pool the buying power of hundreds of thousands of Illinoisans so all of us can get a better deal on health care. Done wrong, the exchange will be an ineffective website with the same expensive plans and spotty coverage.

Don't let the insurance industry undermine reform: Tell our state leaders to stand strong for Illinois consumers.

Done right, the exchange will level the balance of power between you and the health care industry — driving the industry to cut the waste and prioritize high quality, bang-for-the-buck care.

Done right, the exchange will also cut through the confusing clutter and allow you to compare different health care plans in a simple, apples to apples way. You'd even be able to take your plan from one job to another.

Done wrong, the exchange will be merely an online listing of the same over-priced plans and inadequate coverage.

The legislative taskforce will make recommendations by September 30th on how to create the exchange in Illinois. In the meantime, insurance lobbyists don’t want more competition and are working to kill an effective insurance exchange in our state.

Click here to make sure state officials hear from you.

Brian Imus
Illinois PIRG State Director

Common Questions about the Competitive Health Care Marketplace

If done well, proponents say, the Competitive Health Care Marketplace (formerly called the insurance exchange) would make it easier to buy health insurance and lead to lower prices because of increased competition. But, if designed poorly or if this process is controlled by the insurance industry and their friendly allies in the Illinois General Assembly, experts warn, healthy people could avoid the exchanges, leaving them to sicker people with rising premiums.

Here are some common questions:

What is a Competitive Health Care Marketplace, as envisioned by the health law?
It's a marketplace where individuals and small employers will be able to shop for insurance coverage. They must be set up by Jan. 1, 2014. The exchanges will also direct people to Medicaid if they're eligible.

Will all states have Competitive Health Care Marketplaces?
States have the option of setting up their own Competitive Health Care Marketplace, forming coalitions with other states to create regional exchanges - or opting out altogether. In that case, the federal government will run the Competitive Health Care Marketplace for their residents.

Will anyone be allowed to buy from the Competitive Health Care Marketplace?
No. Initially, exchanges will be open to individuals buying their own coverage and employees of firms with 100 or fewer workers (50 or fewer in some states). Most Americans will continue to get insurance through their jobs, not via the Competitive Health Care Marketplace. The Congressional Budget Office estimates 11.5 million people will use the Competitive Health Care Marketplace in 2014 and 27.1 million in 2018. Most will be people who are eligible for subsidies, which will average an estimated $4,600 per person in 2014. Undocumented immigrants will be barred from buying insurance on the Competitive Health Care Marketplace.

What about federal workers?
Members of Congress and their staffs will be required to buy through Competitive Health Care Marketplace if they want coverage from the federal government. Other federal employees won't be required to use a Competitive Health Care Marketplace.

Will exchanges be like travel websites or some existing health insurance sites? In some ways. People will be able to compare policies sold by different companies. Purchasing insurance is complex and can be confusing, so information on the plan benefits will be standardized in an effort to make it easier to compare cost and quality. Plans will be divided into four different types, based on the level of benefits: bronze, silver, gold and platinum.

What will the coverage sold on the Competitive Health Care Marketplace look like?
Plans will have to offer a set of "essential benefits." Those details, still being developed by the Obama administration, will include hospital, emergency, maternity, pediatric, drug, lab services and other care. Annual cost-sharing, or the amount consumers must fork over before insurance payments kick in, will be capped at the amounts allowed for health savings accounts -- currently, nearly $6,000 for individual policies and $12,000 for family plans.

How much will the policies cost?
The premiums will vary by type of plan and location. Insurers won't be able to charge more based on gender or health status. They will be able to charge older people up to three times more than younger ones.

Will the states negotiate premiums with the insurers?
The law doesn't require states to set or negotiate premiums. However, states may have some influence over prices. For example, states can decide whether to open the Competitive Health Care Marketplace to all insurers, or to limit the number. State insurance commissioners will be able to recommend whether specific insurers should be allowed to sell in the Competitive Health Care Marketplace, partly based on their patterns of rate increases.

What if I can't afford the premiums?
People who earn less than 133 percent of the federal poverty level, $14,484 this year, will qualify for Medicaid in all states, under the law. Above that, sliding scale subsidies for private insurance on the exchanges will be available for residents who earn up to 400 percent of the poverty level, about $43,560 this year. Most people will be required to have coverage of some sort beginning in 2014.

Will all insurers have to offer policies through the Competitive Health Care Marketplace?
No. Insurers won't be required to sell through the Competitive Health Care Marketplace.

Will all state Competitive Health Care Marketplaces be the same?
No. States can design their Competitive Health Care Marketplace differently, an issue that's sparking debate in statehouses nationwide. Some states may choose to set additional standards for insurers beyond the federal law. Another important issue: The makeup and power of the governing boards overseeing the Competitive Health Care Marketplace. Some states, such as Maryland, are considering barring insurance industry and sales agents from their governing boards. Others, like North Carolina, have pending legislation that includes representatives from those groups on their governing boards.

Kathleen Duffy
Campaign for Better Health Care