The U.S. Department of Health and Human Services (HHS) has proposed a framework for state-based affordable insurance exchanges, which will enable individuals and small employers to directly compare private health insurance options on the basis of price, quality and other factors.
The proposed rule, which will be published in the Federal Register July 15, sets minimum standards for affordable insurance exchanges and gives states the flexibility to design exchanges that best fit their unique insurance markets, HHS stated.
In addition, the proposed rule allows states to decide whether their exchanges should be local, regional or operated by a non-profit organization; how to select plans to participate; and whether to partner with HHS to delegate work.
The proposal offers states guidance and options on how to structure their exchanges in two key areas:
- Setting standards for establishing exchanges, setting up a Small Business Health Options Program (SHOP), performing the basic functions of an exchange and certifying qualified health plans (QHPs) for participation in the exchange; and
- Ensuring premium stability for plans and enrollees in the exchange, especially in the early years as new people come in to exchanges to shop for health insurance.
The proposed rule would codify the sections of the Patient Protection and Affordable Care Act (PPACA) that define the requirements under which states can establish an exchange for individual and small group markets. It also would codify the section of the PPACA that stipulates an exchange must be a governmental agency or non-profit entity established by the state and operated consistent with the requirements in the PPACA.
To be approved, an affordable insurance exchange must be capable of carrying out the HHS-required functions—including enrollment, operation of a SHOP and certification of QHPs—among other requirements. In addition, states seeking approval of an exchange must agree to perform their responsibilities related to the operation of a reinsurance program, set forth in the PPACA.
The entire geographic area of a state must be covered by one or more exchanges. A state could meet this requirement by having a combination of a regional exchange and one or more subsidiary exchanges, although to minimize consumer confusion, only one exchange may operate in each geographically-distinct area, according to the proposed rule.
The exchanges will become operational by Jan. 1, 2014, the HHS stated.