In the three months following the Supreme Court’s decision upholding the constitutionality of the Affordable Care Act (ACA), states have been evaluating their options under the provisions of the Act. One option involves the establishment of a health insurance exchange. Health insurance exchanges are intended to be the vehicle through which millions of Americans will obtain health insurance as mandated by the ACA. Under the ACA, each state may elect to establish an exchange to facilitate the purchase of health insurance coverage. However, states are not required to do so. If a state elects not to create its own exchange, a federally-facilitated exchange will be formed by the Department of Health and Human Services (HHS). Federally-facilitated exchanges can be established directly by HHS or through a partnership with a non-profit entity.
To date, the states have been divided on what to do about the health exchanges. Currently, sixteen states have announced that they will create their own, state-based exchanges. Conversely, seven states have announced that they will take no action and let HHS directly establish a federal-facilitated exchange. Four states have announced that they will create a partnership with HHS under the framework of a federally-facilitated exchange. Twenty-three states remain undecided.
Michigan is one of the four states that intends to create a partnership with HHS for the establishment of a health exchange. Because of the partnership, Michigan’s exchange will not be completely controlled by the federal government. However, the federal government has not released many of the operational details of the federal exchange or the partnership option. Here is what we know so far.
The operation of a health exchange will be broken down into twelve categories. These categories are:
- legal authority/regulation;
- plan management;
- eligibility and enrollment;
- customer service;
- finance and accounting;
- oversight and monitoring;
- risk adjustment and reinsurance;
- human resources and organization;
- privacy and security; and
- contracting, outsourcing and agreements.
Under the partnership exchange model, Michigan will have limited responsibilities. These responsibilities include plan management, the in-person component of customer service and a narrow role in eligibility and enrollment. The scope and breadth of these responsibilities remain to be defined.
Because a federal partnership is still a federal exchange, HHS would ultimately sign off on all decisions, except those related to the few areas of authority retained by the states. We do know that Michigan will be required to make changes to its business processes and IT systems. The federal government will direct many of these changes, and Michigan may be financially obligated to support these changes. Federal grant resources with no state match can still be used for the establishment of a federal partnership exchange. Michigan officials are scheduled to meet with HHS officials next week to discuss in detail how the health exchange will be established and operated in Michigan.
At the state level, Michigan plans to create an entity called the MIHealth Marketplace (MIHM) to handle its responsibilities of the partnership. Governor Snyder’s vision for MIHM is for it to be a non-profit corporation controlled by a board of directors. The board of directors will likely consist of seven voting members, with the OFIR Commissioner to serve as an additional non-voting member. Because of the exchange’s impact on Medicaid, Governor Snyder is also considering adding the Medicaid Director as a non-voting member. An executive director will run the day-to-day operations of MIHM. Governor Snyder’s plan also includes a large advisory board of various stakeholders including businesses, consumers, providers and other interested individuals to participate in MIHM decision-making.
Currently, Michigan has yet to enact legal authority for MIHM. On September 30, 2012, Michigan must choose its Essential Health Benefit (EHB) package and submit it to HHS. The EHB will determine plan benefits in both off and on exchange plans for individual and small group markets. This decision will apply for 2014-15. Despite Michigan’s election to form a partnership exchange with HHS, Michigan can still establish a state-based exchange to take over operations in 2015. According to Steven Hilfinger, Chief Regulatory Officer, Director of the Michigan Department of Licensing and Regulatory Affairs, Michigan has focused on partnering with the federal government because of the deadlines involved in the exchange process.
The upcoming timeline of critical steps in the health care exchange process are as follows: On November 16, 2012, Michigan must submit a letter from Governor Snyder that includes Michigan’s “blueprint” to the federal government for exchange certification. On January 1, 2013, the federal government must certify each state regarding its readiness to have an exchange operational by the “go live” deadline. The “go live” deadline is October 1, 2013. At this point, open enrollment begins. On January 1, 2014, benefits of exchange plans begin, and on January 1, 2015, exchanges must be financially self-sustaining.
To find out more about the impact that the Affordable Care Act has on health care and your business, contact Health Care Department Chair Jonathan Raven at firstname.lastname@example.org or 517.377.0816, or our Employee Benefits Department Co-Chair Elizabeth H. Latchana at email@example.com or 517.377.0826.