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Keck Recommendation

Keck Recommendation

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Published by: Christopher D. Weaver on Nov 15, 2011
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12/13/2011

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Charge
The Competitiveness and Transparency Subcommittee was charged with examining howpurchasers and patients in South Carolina and elsewhere currently find health insurance andhealth providers which provide the best value, examine the PPACA health insurance exchangemandate to determine its proposed role in improving value, and make recommendations to theHealth Planning Committee on a recommended course of action.
Process
The committee met eight times between April and November 2011. Its members w
 
erecomprised of representatives from the provider community, health insurers, the general public,insurance brokers, the legislature and state agencies. Input was achieved through a variety ofmeans: research material of interest was submitted to the sub-committee by individualmembers as background and the Department of Health and Human Services distributed threetimes a week an online
clipping service
of insurance exchange articles from other states andWashington D.C.; local and national speakers were invited to present to the sub-committee aswere individual subcommittee members; members attended national conferences whichdiscussed or were devoted to health reform and insurance exchanges including severalsponsored by CMS; substantial time for broad discussions during meetings was allowed and allmeetings were open and allowed time for public comment.
Recommendations
The subcommittee's analysis and discussion of the research and testimony leads us to thefollowing three recommendations for consideration by the full Health Planning Committee:
Recommendation 1: The state cannot implement state-based health insuranceexchanges as defined under PPACA and ill-defined and unfinished HHS regulations.
No final rules for the operation of state-based exchange exist and HHS has failed toadequately describe how a federal exchange or hybrid exchange would operate.Committing to either course of action - a state operated exchange or federal exchange -tied into the requirements of PPACA is therefore not desirable. At the subcommittee's lastcount, only 16 states have enacted legislation of any sort related to PPACA and themajority of what has been implemented relates to governance
not operations or insuranceregulation.Timelines for implementation of state or federal exchanges are neither reasonable norachievable. The federal government has already delayed policy making several monthsand policy making is presumably easier than actual implementation which must occur at thestate and federal level and must integrate between state and federal systems. Little, if any,consideration was given at the federal level to the very practical concerns of statelegislative and budgeting cycles or state procurement laws which will impact almost everyaspect of exchange implementation, as well as the very real possibility of months of vendorprotests related to procurement awards. In its timeline planning HHS has ignored years ofnationwide experience with similar implementations of Medicaid eligibility, enrollment and
 
 
information management systems which historically require years of business processredesign, procurement and implementation.The primary function of the PPACA health insurance exchanges is to connect individualsand families with federal premium subsidies which ultimately must be reconciled onindividual and joint federal tax returns. Regardless of the subcommittee member'sindividual opinions on the wisdom of subsidies as a means to control costs, theassignment, management and reconciliation of federal subsidies is solely a federal concernin which the state has no compelling interest.The only organization capable of implementing the requirements of a state based exchangeis the South Carolina Department of Health and Human Services, however, thedepartment
s resources and management capacity are fully committed to improving thecurrent Medicaid program which is now serving approximately 900,000 persons monthlyand preparing for a possible expansion of Medicaid required by PPACA which will bringanother 500,000 to 600,000 individuals into the Medicaid Program. The Department'smission is most appropriately focused on improving the health of these individuals who areamong the states most vulnerable and poor, not performing marketing, eligibilitydetermination, enrollment and back office management for the private insurance industry.PPACA and HHS proposed rules on navigators are poorly conceived and duplicatesubstantial capacity which already exists through private brokers. Assigning the role of"navigator" to a broad range of groups with little regard to licensure and liability concerns isnot only naive, but potentially harmful to consumers who will now essentially be receivingtax advice from lay persons with little preparation or accountability.Exchanges alone have not had demonstrated robust success in making health care moreaffordable. This is most likely due to the fact that the major underlying contributor to healthinsurance premiums is the cost of health services themselves - not insurance premiumsand profits. And while the Institute of Medicine has identified that approximately $190billion of excess costs exists in the health care system due to administrative waste andduplication often the result inefficient payers practices - exchanges as operating andcontemplated under PPACA do not inherently change this dynamic. In fact, according tonational health expenditure data presented by the South Carolina Institute of Public Health,the net cost of insurance - which includes administrative fees to manage care, ensurequality, pay claims, as well as profit margins - only account for about 7 percent of thenation's health bill. And so while employing exchanges to increase competition amongplans may reduce this net cost to some extent, they do little now (and as envisioned inPPACA) to reduce costs in the other 93 percent of our national health care expenditure.In addition to large amounts of uncertainty created by the failure of HHS to promulgateregulations, there is considerable uncertainty as to how the Supreme Court might rule nextsummer should it choose to hear challenges to PPACA as well as what changes nationalelections might bring. Popularity of PPACA in national tracking polls is at an all time lowwith over 50 percent of the population opposing the law. Given that states currently face
 
 
extreme challenges to their budgets and infrastructure and under PPACA have the
escapevalve
of being allowed to take control of the exchange should they determine whateverfederal solution implemented is unsatisfactory, there is little apparent "first-mover"advantage to states.
Recommendation 2: The state should encourage the establishment and expansion ofprivate exchanges designed to serve the needs of a variety of consumers.
Instead of a one size fits all concept of health insurance exchanges, South Carolina canencourage currently operated private exchanges, employer groups, consumer groups andothers to offer exchanges tailored to specific populations. These exchanges could operateunder a variety of governance models, including that of an active purchaser - such as agroup of independent employers might wish to support.Exchanges should provide consumers with an easy to navigate set of insurance choicestailored to that individual's specific needs. They should provide accurate, up to dateinformation on health plan and provider cost and quality.The state may consider a special category of licensing for exchanges through theDepartment of Insurance given the role they can play in connecting individuals to riskbased insurance products and third party premium contributions as well as collectingpremiums.Private exchanges that choose to do so should be allowed to process Medicaid eligibilityand enrollments under contract with Medicaid.Barriers to portability of benefits and the efficiency and adoption of defined contribution,consumer driven, high deductible and major medical plans in South Carolina should beremoved.The state should ensure that benefits beyond any essential benefits identified at the federallevel cannot be mandated in South Carolina without the approval of the full legislature.
Recommendation 3: The state should encourage full consumer empowerment,engagement and responsibility in health and healthcare decision making.
The state should consider
 
legislation from other states which requires timely, accurate andtransparent reporting of health plan and provider price and quality data and removesbarriers to the public disclosure of this information.Purchasers and consumers must be able to compare both out of pocket prices and qualityof services provided in order to determine which plans and providers provide the mostvalue. Consumers should be able to receive price quotes if requested prior to receivingservices. Prices paid for services on behalf of consumers by insurers should not beconsidered proprietary information.

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