CHICAGO (AP) – Within two years, Illinois residents and small businesses are supposed to be able to visit a state website to comparison shop for health insurance.
But fundamental disagreements in President Barack Obama’s home state over how to govern the website called the Health Benefits Exchange and required by the nation’s health care overhaul threaten efforts to get it up and running on time. Consumer advocates want a governing board free of insurance industry members; insurers want a voice in overseeing what’s been described as a Travelocity for health insurance.
“This is a fight between public interest and small business groups and the insurance lobby,” said Brian Imus of the nonpartisan Illinois Public Interest Research Group.
The sides also disagree on whether the exchange should be financed by assessments on insurers or fees by users, and whether the state should be able to actively solicit bids from and negotiate with insurers on behalf of consumers.
Illinois is in the national spotlight because most states haven’t yet passed legislation establishing insurance exchanges and they’re watching Illinois, said one insurer carrier lobbyist. A hearing on a health exchange bill, sponsored by Rep. Frank Mautino, a Spring Valley Democrat, is set for Tuesday in Springfield.
“If a Democratic legislature and a Democratic governor’s office can’t move the exchange (law), it gives a lot of signals to other states that aren’t in (legislative) session,” said Elena Butkus, regional vice president for government affairs for Aetna Inc.
If a compromise can’t be reached this week allowing legislation to pass, it’s unclear how Illinois could get an exchange working by Oct. 1, 2013, as required by federal rules, an official with the Illinois Department of Insurance said. Lawmakers and Gov. Pat Quinn’s office are working on a deal.
“I think everything’s on the table right now,” said Kate Gross, assistant director of health planning for the insurance department, who added that an agreement is close. “As long as everyone continues to want an effective state-based exchange, I am confident a bill will pass.”
The bill, as proposed, sets up a nine-member board to govern the health benefits exchange, with seven members appointed by the governor and two appointed by the state attorney general. Board members would represent small businesses, workers, consumers and people on Medicaid. Insurers would be relegated to an advisory committee in the bill’s current version.
Illinois officials estimate nearly 800,000 uninsured Illinoisans will get public or private health insurance through the exchange in 2014, climbing to more than 1 million by 2020. A key component of Obama’s health law, the state-based exchanges are meant to create more competition and reduce administrative costs as they offer one-stop shopping for health coverage.
Most people buying insurance through the exchanges would be eligible for taxpayer-financed subsidies, and the exchanges will help people who qualify enroll in Medicaid. Participating insurance plans would have to take all applicants, regardless of prior health problems.
The Illinois exchange could even include a calculator that could determine a consumer’s insurance cost after their tax credit.
Only 10 states have passed laws establishing health insurance exchanges in compliance with the nation’s health law, according to the nonpartisan Center on Budget and Policy Priorities. Another seven states, including Illinois, have passed laws setting up study committees on the issue, and two more have passed laws indicating they intend to create exchanges.
In states that don’t set up their own exchange, the federal government will do so. Louisiana has announced it will not create its own exchange and the Republican governors of Oklahoma and Kansas have said they will return millions of dollars in federal “early innovator” grants that would have gone toward developing information technology for the exchanges.
Some small business owners support the Illinois legislation.
If done right, the exchange will give small businesses more bargaining power with insurers, said Steve Banke, co-owner of 3-Point, a Chicago-area company that provides IT services to small businesses.
Banke, chairman of the health care committee for the Small Business Advocacy Council, hopes an exchange will make it easier for small businesses to compare prices on insurance. And it will make premiums more affordable if Illinois is an “active purchaser,” that is, if the state excludes health plans on the exchange that don’t offer a good deal, he said.
The soaring cost of insurance premiums is a problem shared by small business owners, who lose out because they lack the negotiating power of larger companies, Banke said.
“It’s crazy. We have seen double-digit increases pretty much every renewal except one in the past five years,” Banke said. His company has reduced benefits, increased deductibles or changed carriers to
provide affordable health coverage to employees, he said. “What it takes to get health insurance is just insane.”
Aetna’s Butkus argued that an exchange would “promote real competition” only if the state plays a less active role.
“Aetna supports a competitive and robust marketplace and we do not believe the exchange should solicit bids or engage in the purchase of insurance,” Butkus said.
The bill is SB1313.
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