State studies health insurance exchange

New York officials are moving ahead to lay the foundation of a state health insurance exchange despite the state Senate”™s failure to adopt a bill creating the new insurance marketplace in the 2011 legislative session.

The federal Affordable Care Act of 2010 requires states to create their own exchanges to give individuals and small businesses access to affordable health care coverage or be included in a federal exchange. The exchanges are to begin operating by Jan. 1, 2014.

New York has been awarded $38.1 million in federal grants to plan and implement the exchange. That includes a two-year grant of $27.4 million that the state was awarded in February as one of seven “early innovator” states that will design and implement the information technology infrastructure need to operate the exchange. New York will share its developed components with other states as they create their insurance markets.

The state Assembly in June approved a bill establishing the New York Health Benefit Exchange, a public-benefit corporation. Its nine-member board of directors will include health care industry professionals with a range of expertise and the state”™s financial services superintendent and health commissioner. Five regional committees will advise the exchange board on variations in health insurance coverage available around the state.

The bill also creates a Small Business Health Options Program as part of the exchange. It will assist business owners with fewer than 50 employees in helping their workers enroll in health plans offered in the exchange”™s group market.

To align the state program with the federal government”™s definition of a small business, the exchange will be open to employers with up to 100 employees as of Jan. 1, 2016, two years after its required launch date. The bill gives leeway for the exchange to include businesses with up to 100 employees at an earlier date.

The authorizing bill, however, did not make it to the Senate floor for a vote in the busy legislative session that ended in June. Instead it was referred back to the Senate rules committee.

Among Senate Republicans, “Some of the conference was concerned that there were some other things going on at the federal level” that could affect the exchange program, said Jeffrey Bishop, spokesman for Sen. James L. Seward, the bill”™s Republican sponsor from Oneonta.

Legal challenges to the constitutionality of the sweeping federal health care reform measure were among their concerns. The U.S. Supreme Court this month agreed to review a legal challenge brought by 26 states in a joint filing that claims the law”™s requirement that individuals buy health insurance or face penalties is an improper exercise of federal authority and that the entire law should be tossed out. The nation”™s highest court could issue a ruling by June.

“That”™s one of the issues that they”™re waiting to see how it plays out,” Bishop said. In the 2012 session in Albany, though, the insurance exchange bill “certainly is a piece of legislation that will still be under discussion.”

At New York Health Plan Association Inc., an advocacy group representing 25 managed health care plans in Albany, “We felt that the agreed-upon bill was a good starting point,” Senior Vice President Leslie S. Moran said. “It was designed to set up the framework to deal with the governance issues and do some of the studies before putting the exchange in place. We really felt it created a good foundation for the exchange and allowed the state to undertake the steps and studies to answer a lot of the questions that will need to be answered.”

The state Health Department already has started some of the studies authorized in the stalled legislation. It has requested proposals from consultants for six additional studies of elements of the health insurance exchange. Proposals are due Dec. 23 in Albany.

The studies, for which the state has up to $576,000 in funding, are expected to  begin in late January. The winning bidder or bidders will have a little more than two months to complete their projects unless the health department decides to extend an April 1, 2012 deadline.

While awaiting the Supreme Court decision, “I think the general feeling and wisdom is that states, including New York, will continue to work on their exchange plans because failing to do so would put them so far behind schedule,” Moran said.