Consumers Have A Toe Hold?

The Obama administration published rules for the so-called 'health exchanges' (find them at http://www.healthcare.gov/news/factsheets/2011/07/exchanges07112011a.html). Here is an excerpt:

Department of Health and Human Services
Federal Register publication date: March 27, 2012
Patient Protection and Affordable Care Act; Establishment of Exchanges and Qualified Health Plans; Exchange Standards for Employers

Final rule, Interim final rule.

Excerpts from pages 34-37

Summary of Regulatory Changes

If the Exchange is an independent State agency or not-for-profit entity established by the State, we proposed that its governing board meet the standards outlined in §155.110(c)(1) through §155.110(c)(4) of the proposed rule, which included: the Exchange accountability structure must be administered under a formal, publicly-adopted operating charter or by-laws; the Exchange board must hold regular public meetings; representatives of health insurance issuers, agents, brokers, or other individuals licensed to sell health insurance may not constitute a majority of the governing board; and, all members of the governing board must meet conflict of interest and qualifications standards.

Several commenters urged HHS to apply conflict of interest standards to eligible contracting entities.

Response: We generally defer to States to establish conflict of interest standards for eligible contracting entities beyond the prohibition of health insurance issuers being eligible contracting entities, as established in section 1311(f)(3) of the Affordable Care Act and codified in §155.110(a)(1)(iii). We believe that many States have existing conflict of interest laws, have appropriate expertise in this area, and can support Exchanges in the development of conflict of interest standards for such entities.

Commenters suggested broadening the list of groups identified as having a conflict of interest in proposed §155.110(c)(3)(ii) to include: health care providers; anyone with a financial interest; anyone with a spouse or immediate family with a conflict of interest; major vendors, subcontractors, or other financial partners of conflicted parties; members of health trade associations and providers; and, health information technology companies. Commenters recommended that such groups be limited or prohibited from participation in an Exchange. Other commenters recommended that individuals with ties to the insurance industry participate through technical panel or advisory group instead of through board membership.

Response: As proposed, §155.110(c)(3)(ii) ensures as a minimum standard that the groups with the most direct conflict of interest cannot form a majority of voting members on a governing board. We believe that further definition of conflict of interest may create inconsistencies with State law and other existing State standards, but note that Exchanges may expand the list or further define conflict of interest. For example, a State may elect to prohibit any conflicted members from serving on the board.

Final rule, Interim final rule. (644 pages):

Here is an excerpt of the analysis by the AP journalist RICARDO ALONSO-ZALDIVAR (find it in the Salt Lake Tribune here: http://www.sltrib.com/sltrib/world/53699851-68/exchanges-health-states-f...):

Fifty million people in America lack health insurance and the law says most of them must soon be provided coverage. But how to deliver?

The Obama administration Monday finalized an ambitious blueprint for new state-based markets that will offer consumers one-stop shopping. . .Starting Jan. 1, 2014, new health insurance markets called "exchanges" must be up and running in every state, the linchpin of a grand plan to make health insurance accessible and affordable to those who now struggle to find and keep coverage. Individual consumers and small businesses will be able to shop online for competitively priced coverage, and many will receive government subsidies to help pay premiums.

"More competition will drive down costs and exchanges will give individuals and small businesses the same purchasing power big businesses have today," Health and Human Services Kathleen Sebelius said in a statement.

The new markets are for individuals and small businesses buying plans. Most people who now have employer health insurance will not have to make changes. . .For things to go smoothly, state and federal officials must work together to verify private personal and financial details for millions of people, make sure that consumers are enrolled in the right health plan, and accurately calculate how much government aid, if any, each household is entitled to.

And with customer service the goal, consumers need to get answers in hours, not weeks.

Nearly 30 million people are eventually expected to get private health coverage through exchanges, about half of whom are currently uninsured.

Another group of uninsured people — as many as 16 million low-income Americans expected to qualify for Medicaid — could also enter the system through their exchanges.

States have until Jan. 1, 2013 to obtain federal approval for their exchanges. Among the rule’s key elements:

States can receive conditional federal approval for their exchanges if their plans are far along but not final by Jan. 1, 2013. States can operate exchanges in partnership with other states. The federal government will provide funding for different types of exchanges to allow for flexibility.

The state exchanges themselves will determine the number and type of health plans offered to consumers, within broad standards set by the federal government. Plans will have to comply with marketing rules to ensure they are not trying to cherry-pick the healthiest customers in the state.

Consumers must be able to apply online for coverage in their state exchanges. To reduce paperwork, exchanges will rely on existing computer databases to verify basic personal information and eligibility. However, some key details, such as whether the consumer is a legal resident of the U.S., may have to be verified by the government. And the IRS will have final say on tax credits.

Exchanges must be able to pick from two federally approved methods for coordinating with the Medicaid program in their states.

Exchanges must be able to use intermediaries called “navigators” to help educate consumers and small businesses about how the new system works.

Exchanges must be financially self-sufficient by 2015, by charging fees to support their operations.

Here is how the rules were viewed in the Washington Post (find it here: http://www.washingtonpost.com/national/health-science/rules-give-shape-t...):

Responding to thousands of comments on earlier proposals, the administration made some changes, including setting a requirement that governing boards have at least one voting consumer representative. Earlier rules allowing up to half of the other members to have ties to the insurance industry stayed the same.

That disappoints consumer advocates, who would have preferred the governing boards “be dominated by consumers,” said Timothy Jost, who speaks as a consumer representative before the National Association of Insurance Commissioners and is a professor at the Washington and Lee University School of Law. But Jost said he is pleased the final rules require at least one consumer representative. “It at least gives a toe-hold,” he said.
The exchanges are seen as a key element in the health law, offering one-stop shops for individuals and small businesses looking to purchase health insurance. They will also help determine applicants’ eligibility for programs such as Medicaid, and for federal subsidies to help them purchase insurance. More than 21 million people will purchase coverage through the exchanges by 2016, according to Congressional Budget Office projections.

The Obama administration touted the 646-page set of rules as granting states great flexibility on how they design their exchanges, on the types of organizations – nonprofit or public agency – that will oversee them, and on whether to partner with the federal government to operate parts of it.

Monday’s announcement also included some “interim” rules, which could be tweaked after a 45-day public-comment period. These cover issues such as how quickly states must determine whether an applicant is eligible for Medicaid or the Children’s Health Insurance Program, and the role insurance brokers will play in helping low- and middle-income people apply for federal subsidies to buy coverage.

Karen Ignagni, president and chief executive of America’s Health Insurance Plans, a trade group, said her organization would be reviewing the rule and offering feedback.

“Exchanges will work best if they are true marketplaces that maximize choice and competition so that individuals, families, and small businesses can purchase plans that are right for them,” she said in a prepared statement. “Consumers will be best served if a state exchange adopts an efficient, cost-effective approach that leverages existing health-plan resources, utilizes federal resources or guidance where sensible, and relies on the exchange itself to administer key functions.”

Here is Dr. Don McCanne's brief comment:

Skim reading this 644 page HHS rule on the state insurance exchanges to be established under the Affordable Care Act makes you realize even more how unnecessarily complicated this legislation had to be merely to accommodate the private insurance industry. If you are suffering from euphoria, read this rule and it will cure you.

As everyone knows, the Affordable Care Act was written by and for the private insurance industry. Just to show how much the insurance industry's influence extends into the Obama administration you merely need to look at the rule on the governing board composition and conflict of interest, to wit, "representatives of health insurance issuers, agents, brokers, or other individuals licensed to sell health insurance may not constitute a majority of the governing board."

Absolutely astounding! The private insurance industry can occupy up to one-half of the seats on the governing board! Amongst all of the other members of the board, they need only one friend. Watching the reform process take place it is clear that they have friends everywhere!

During the comment period, many expressed concern about this obvious conflict of interest, suggesting even that insurers participate as an advisory group rather than through board membership. And HHS's response? "We believe that further definition of conflict of interest may create inconsistencies with State law and other existing State standards."

This is an outrage! Mobilize the forces!

My comment:

In the Dream World that is the Obama administration on health system reform, health insurers will help make the acquisition of health benefits easy for the individuals and small groups currently left out of the system. Utah's experience with exactly this kind of dream world as it organized and operationalized one of the two currently functioning 'health exchanges' should help all Americans see that dream is a nightmare. But HHS Secretary Sebelius dreams on of a world where perfect competition in on-line purchasing of health insurance will drive down the cost of health care. And Karen Ignagni, leader of the health insurance industry trade group, cheers her on from the sidelines, asking that everything just be left to her colleagues in health insurance. They know best. Meanwhile, the rules guarantee that the governing body for each state health insurance exchange will have at least one consumer as a voting member--celebrated as a toe-hold!. Ladies and Gentlemen! Do the 660 pages of rules, interim or otherwise, give you comfort that the business of health insurance will become consumer friendly? Is this what is meant by giving states flexibility in health system reform? That they can appoint their own consumer to be on a board otherwise controlled by corporate interests? Will these exchanges actually function at all on the timeline laid out? When can we stop pretending that any of this has anything to do with fixing the poor quality and inefficiency that is the cause of America's high health costs?

Dr. Joe Jarvis