Federal health plans take shape, but issues linger

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Advocates of a "public option" insurance plan didn't see their wishes granted during President Barack Obama's first term, but the consolation prize -- a nationwide health insurance plan, available to all, separate from Medicaid and Medicare -- should be in place by the end of next year barring a repeal of the health overhaul law known as Obamacare.

Part of that 2010 law, known more formally as the Affordable Care Act, requires the federal government to sponsor two nationwide health insurance plans, available in every state, to be administered privately by contractors.

The insurance would not be a purely government-run program, such as the "original" Medicare Part A, but those who support the multistate plans say the options will increase competition within the insurance industry and within the Affordable Care Act's online health insurance exchanges, particularly in states where one or two carriers dominate market share.

Most importantly, "It could create a fully portable insurance benefit," said Trish Riley, a health policy lecturer at George Washington University and the co-author of a report on the multistate plans.

There's something for every political stripe to like -- and dislike -- about the plans.

For Republicans who say one path to lower insurance prices and medical costs is to allow insurers to compete across state lines, this is a first, tentative step in that direction. For Democrats who wanted a public option, this, too, is a first step.

The plans will be administered, and the premiums and benefits negotiated, by the federal Office of Personnel Management. That's the same agency that runs the Federal Employees Health Benefits Plan, which covers 8.2 million people.

The federal government is expecting 750,000 people to subscribe to the multistate plans in the first year when they are to be available in 60 percent of the country. By year four of the health insurance exchanges -- 2018 -- the multistate plans should be available nationwide, according to the guidelines set out in the Affordable Care Act.

By law, the two plans -- one of which must be sold by a nonprofit company and one of which must forgo abortion coverage -- have to be accepted into every state-run health insurance exchange. The exchanges are another element of the Affordable Care Act, online markets where individuals and small businesses can shop for insurance coverage. States have the option of building their own exchanges, or allowing the federal government to run them.

One issue that must be resolved before 2014, when the policies become available and the exchanges come online -- who regulates the new plans?

"We have some grave concerns," said Kansas Insurance Commissioner Sandy Praeger. If the federal government insists that the "national" plans remain consistent from state to state, a plan that conforms to regulations in Pennsylvania may not, for example, conform in Iowa. "It creates an unlevel playing field," she said. "You have to have all the plans play by the same rules."

The language of the law seems to include such safeguards, though state insurance commissioners are waiting for more definitive guidance from the Office of Personnel Management on how the multistate plans will guarantee a uniform benefit from state to state.

And, naturally, those commissioners are also waiting on the results of next week's election.

"It's really hard to get folks to have meaningful discussion around any of this stuff," given the political uncertainty, Ms. Praeger said.

Until those issues are hashed out, it's too early to say which company or nonprofit would be the ones tapped to run the multistate insurance plans.

But the Government Employees Health Association, a nonprofit group that covers more than 900,000 federal employees, retirees and dependents, seems like an obvious choice to some industry observers, according to the New York Times.

"Our expertise in the Federal Employees Health Benefits Program would be useful in the private marketplace," Richard G. Miles, the association's president, told the publication. "But we are concerned about the underwriting risk in providing insurance to an unknown group of customers."

Traditional insurers are concerned, too, and would seem to have little incentive to assemble and sell a multistate plan when they can sell products in the exchanges directly.

"Many questions remain unanswered because the federal government has yet to issue the request for proposal that will outline the requirements" of the multistate plans, said Janice Maszle, spokeswoman for Highmark Inc., Pennsylvania's largest health insurer. "We do feel strongly that these plans must operate on a level playing field with the other qualified health plans on the exchanges, [which] will prevent adverse selection."

The George Washington University Medical Center report on multistate plans under the Affordable Care Act is available online at http:/sphhs.gwu.edu/departments/healthpolicy/dhp_publications/pub_uploads/dhpPublication_A80A0AAA-5056-9D20-3D25B59C65680B79.pdf

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Bill Toland: btoland@post-gazette.com or 412-263-2625.


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