States Uneasy About Insurance Exchanges Opt for Hybrids

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Georgia, Ohio and Wisconsin followed more than a dozen other states in refusing to establish health insurance exchanges mandated by Obamacare. Many states are opting for some type of hybrid program where states share with the feds certain specific aspects of exchange implementation.

Republican Governor John R. Kasich of Ohio said, “Ohio will not run an Obamacare health exchange, but will instead leave that to the federal government to do. Based on the information we have, states do not have any flexibility to build and manage exchanges in ways that respond to unique needs of their citizens.”

Likewise, Republican Governor Scott Walker of Wisconsin said, “From a philosophical standpoint, I prefer state-run over federal on any day on any subject. Wisconsin taxpayers will not have meaningful control over the health care policies and services sold to Wisconsin residents,” said Walker.

Overall, many governors still have questions about the costs of building and running an exchange. Even Democratic Governor Bev Perdue of North Carolina had reservations, saying that her state would establish a hybrid form of exchange.

Hybrid exchanges have attracted a number of skeptics of Obamacare. After spending months researching exchanges, Indiana Libertarian gubernatorial candidate Rupert Boneham noted that there were still too many unanswered questions about the healthcare law to make an informed decision. He’s opting for hybrid health exchange system in which state and federal officials would work together to create an insurance marketplace.

"Since we are required to make a partially blind decision, I would say that any plan for implementation of the Affordable Care Act must give Hoosiers the greatest amount of control and authority over regulation and plan management," said Boneham. "The plan should also keep Indiana from being burdened with the unknown costs of managing the exchange."

How would a hybrid exchange affect your insurance company? In a typical hybrid exchange, the state would control a plan’s management and customer assistance, as well as retain the right to set requirements and regulations for consumer councilors and insurance brokers. Much of the cost of running such an exchange would come from the processing and reinsurance of Medicaid and other Health Insurance Programs. Some functions and costs would be borne by the federal government—namely US Health and Human Services.

While hybrid market organizers would not directly negotiate prices or selectively contract, they may define standard benefit packages, provide some level of endorsement, and indirectly encourage health plans to offer high-value coverage.

As an example, under Ohio’s hybrid exchange, the state may perform plan management (such as certifying plans to participate in the exchange), provide consumer assistance (including in-person assistance, outreach and education), implement state navigator programs, determine eligibility for Medicaid coverage, and handle reinsurance programs.

Is your state adopting a hybrid health insurance exchange program? If so, it can affect the plans you offer, how you administer them and at what cost.


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