Panel: Georgia Should Establish Health Insurance Marketplace

Mike Klein, GPPF Forum Editor

Georgia should establish a small business health insurance marketplace outside the “additional layers of cost, complexity and rigidity” associated with federal health care reform mandates.

That is the recommendation from a twenty-five member committee appointed by Governor Nathan Deal.   The political question will soon become:  Should Georgia begin that process now or wait until after next summer’s highly anticipated U.S. Supreme Court health care reform decision?

The Georgia Health Insurance Exchange Advisory Committee report issued Monday proposed development of an exchange “through private or limited quasi-governmental means” as either a non-profit or public corporation.  The report did not establish a timetable.  A minority view said the 2012 Legislature should “authorize a basic structure for an individual health insurance exchange” that would be compatible with federal health care reform law.

Recommendations were released on the internet.  Majority and minority reports, a planning options summary and names of committee members are on the Health Care Reform website.  No news conference was held and Governor Deal did not release a statement.

Health insurance exchanges are mandated by federal health care reform law that President Barack Obama signed on March 23, 2010.  Georgia is among 26 states that filed suit in federal court to overturn the law.  Georgia must establish an exchange by 2014 if the law is upheld by the Supreme Court or a federal exchange would be imposed on the state.

The committee noted that Georgia currently has three distinct options:  “States may run a state-based marketplace, states may defer to the federal government to run a federal exchange, or states may opt into a state-federal partnership which is an option that has not been fully vetted, but at this time, would be structured as a federal exchange with limited state responsibilities included.”

The National Conference on State Legislatures maintains an extremely comprehensive website that tracks the health insurance exchange issue in all 50 states.  The Conference says 13 states enacted exchange legislation in 2010 or 2011.  Seventeen states including Georgia considered but did not pass legislation. Bills were pending in six states and the District of Columbia.

Florida is preparing to launch a small business insurance marketplace that would be established by the legislature but privately operated.  Two states entered the insurance exchange marketplace before federal health care reform.  Planning for Utah’s state-run insurance exchange began in 2005.  Massachusetts created an exchange in 2006.

The advisory committee acknowledged “the political divisiveness surrounding reforms contained within the Affordable Care Act, exchanges notwithstanding.”  It said additional regulations from Washington, the highly anticipated Supreme Court opinion and the 2012 Presidential cycle all “have the potential to dramatically alter the landscape of health reform as we view it today.”

The Committee made clear it prefers a state-controlled marketplace.  “Growing federal control over traditionally-managed state health insurance markets only adds additional layers of costs, complexity and rigidity to needed change over time.  Private sector competitors not bound by onerous federal restrictions will respond to market forces over time, adapting to change, while federally-restricted competitors will likely fail to do so due to lack of  flexibility.”

Georgia’s advisory committee found that, “Rising health insurance costs is nearly universally identified as the biggest challenge for small businesses offering employer sponsored coverage.”  It said about 20 percent of non-elderly Georgians have no health insurance.  The committee reported, “Among all firms in Georgia regardless of size, less than half (approximately 47%) offer employer sponsored insurance as an option for employees.”

The committee proposed creation of a Georgia Health Insurance Marketplace Authority that would administer an exchange for businesses with at least two but fewer than 51 employees.  The state uses the authority model to operate other businesses including the Georgia Ports Authority, the World Congress Center and Georgia Public Broadcasting.

Among other recommendations:  The insurance authority would have no regulatory authority, including rate setting, the authority could not prevent any qualified insurance company from offering its plans within the marketplace, and it would not have independent tax authority.

The authority would also ensure a level playing field for all companies, whether inside or outside the marketplace.  Benefits would be the same and regional or statewide plans would be allowed to participate.  The authority would have a seven-member board of directors.

The executive summary made clear, “Throughout the course of deliberation of the Advisory Committee, a core driver in decision-making and recommendation development was the critical need to ensure current state authority over the private health insurance market in Georgia remains fully intact and is not ceded to the federal government.”

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