Health exchange regulations finalized by the Obama administration Monday envision allowing agents, brokers and private companies to sell coverage on the exchange to individuals and employers through privately-run websites.
According to Beth Mantz-Steindecker, John J. Leppard and Ira S. Loss of Washington Analysis, the rules provide great flexibility to the states to carve out a key role for agents and brokers.
Washington Analysis is a Washington think tank that provides research and analysis to buy-side securities analysts and brokers (i.e., those who serve the institutional market).
They said that the provisions related to the private market were stipulated on an interim final basis, meaning that the federal Department of Health and Human Services will review public comments and then determine whether to finalize them, alter them or remove them.
Given HHS statements concerning the ability of these entities to drive interest in an exchange, the analysts doubted the provisions would be removed.
However, they added it is unlikely that private companies will be permitted to assess consumer eligibility for premium subsidies, cost-sharing arrangements or other affordability programs.
“Compensation mechanisms for these entities will be determined by the state,” the analysts said.
The analysts also said that with Republicans currently in control of the majority of state governments, and with most Democratically controlled states placing an emphasis on initial insurer participation rather than restrictive control, “we think that this rule sets the framework for more market-driven exchanges than some have feared.”
The analysts’ comments were supported by officials of the National Association of Insurance and Financial Advisors.
Robert Miller, NAIFA president, said that while NAIFA staff is still analyzing the 644-page document, it found the recognition for the role of the agent and broker to be encouraging.
“We believe the interim final rule which permits agents, brokers and private companies, to sell coverage on the exchange to individuals and employers should be finalized," he said. "State flexibility may result in more market-driven exchanges."
Miller said that NAIFA will continue to work with HHS to ensure maximum state flexibility is retained, and with the states to ensure all consumers have access to knowledgeable licensed professionals.
Officials of the National Association of Health Underwriters, whose members will be most directly affected by the exchanges, said this morning it was still evaluating the rules for their impact on its members.
They did caution that the regulation merely provides a regulatory floor, and that states are free to enact conditions of participation above and beyond those outlined by HHS.
“This could include limitations on the number of insurers permitted to offer plans via the exchange or even an active exchange model whereby exchanges “negotiate” premiums,” the analysts said. “Still, the emphasis at this point remains on participation,” Mantz-Steindecker, Leppard and Loss said.
Other sources said among the functions which will be the responsibility of the states include which include certifying qualified health plans; operating a website for comparing plans; running a toll-free hotline for consumer support; providing grants to "navigators" to assist consumers; determining eligibility of consumers; and helping consumers enroll.
Other sources noted that certain elements will disappoint insurers and consumers. PoliticoPro, for example, said, “Insurers, wanted less discretion for states - they wanted HHS to prevent exchanges from imposing requirements on plans in the exchanges beyond what is included in the health care reform law.”
Another concern cited by PoliticoPro was that consumers wanted fewer insurers on the exchange board. “But under the new rules, up to half of a board can represent insurers,” Politico Pro said.
However, the final rule, which goes into effect in 60 days, mandates that representatives of insurance issuers, agents, brokers, or others licensed to sell insurance may not constitute the majority of an exchange board.
Furthermore, at least one voting member of the board must be a designated consumer advocate.
The analysts said that states will be given broad discretion in devising methods to ensure that their exchange is financially able to perform all of its required functions.
“This will likely include some manner of user fees or assessments on participating issuers,” the analysts said.
“While HHS encourages states to study the impact of various funding arrangements on risk selection, insurer participation, and provider contracting, the ultimate determination will be left up to the state,” the analysts said.
“Any assessment collected by the exchange would be reflected in plan premiums and thus subject to rate review,” they said.
The regulation finalizes the original start date of October 1, 2013 for the initial open enrollment.
But the Washington Analysis analysts said that HHS has extended the effective close date by one month, to March 31, 2014, “a positive development for insurers.”
At the same time, exchanges must be either approved or “conditionally approved” by January 1, 2013. States failing to do so by that point will see the HHS establish an exchange for them.
In recognition of this short timeframe, HHS has not pursued calls for public comment periods for state exchange applications (“exchange blueprints”), the analysts said.
States seeking to establish an exchange after this time must have an approved or conditionally approved exchange in place at least 12 months prior to the first effective date of coverage, or January 1 of the prior year, they said.