Health on Hold: Lawmakers put the brakes on health insurance exchange effort

After nearly two years of study and building a wide coalition of stakeholders, Wyoming’s Health Insurance Exchange Steering Committee is temporarily on hold. Wyoming’s Legislative leaders in February directed the steering committee to “stand down” in anticipation that portions, or the entirety of the Affordable Care Act (ACA), might be overturned this summer.

Several states, including Wyoming, challenged the constitutionality of the ACA, and the U.S. Supreme Court heard arguments in the case last week. The court is expected to rule sometime in June. Under the ACA, each state is required to have an operating exchange by January 1, 2014. It’s up to each state to decide whether to design and run their own exchange or let the federal government run it. The purpose of an exchange is to improve the accessibility, quality and cost of health insurance for individuals and small businesses by creating a regulated, transparent marketplace and pooling thousands of individuals and small businesses together to give them buying power.

In response to the legislative directive, Wyoming’s steering committee met in Casper March 28 and voted unanimously not to recommend filing for an extension of federal funds set aside for states to study health insurance exchange programs. Wyoming had already missed a deadline to file a grant extension application. However, if the ACA is upheld, Wyoming can re-apply for the federal funds later this year.

Approximately $220,000 in federal funds remain available to Wyoming from the original $1 million set aside.

Steering committee co-chairwoman Rep. Elaine Harvey (R-Powell) said the suspension is appropriate. The group’s work during 2011 yielded some good initial information about the viability of a state-managed exchange program, but it didn’t make sense to continue drafting a set of exchange options if that mandate in the ACA is struck down.

“I’m not going to start hiring consultants and paying people to do things we don’t have to do,” said Harvey.

Others say the Legislature’s order to suspend the committee’s work feels like a political affront to what had grown into a fairly large and diverse group of stakeholders during the past two years. Many individuals, businesses, insurance companies, municipalities and consumer advocates had engaged in the process of researching health insurance exchanges, including variations outside the realm of an ACA mandate that may benefit Wyoming.

“The health care law is the law of the land and it seems to me this committee should do whatever it could to be in compliance with the law of the land,” Alan Harris, who represents private businesses on the committee, said via teleconference during the committee hearing on Wednesday.

Harris voted against filing for an extension, he said, because that was the order given by the Legislature. “To me, the message was clear from the Legislature; put the brakes on this bus,” he said.

Anne Ladd, CEO of the Wyoming Business Coalition on Health, said even if all or part of the ACA is struck down, it is still in Wyoming’s best interest to continue researching all options available.

“I’m going to lobby for pursuing the extension; $220,000 is good chunk of change,” Ladd said. “Even if the law is (ruled to be) unconstitutional, if we do some good work about what (makes) a good plan, not only would the state find that very valuable, but the purchasing community would find that very valuable, too.”

In a follow up interview, Ladd told WyoFile, “The Legislature said they really want to send a message back to Washington D.C. that this is not what we want to be doing. I understand there are pieces of ACA that people don’t like, but I think with insurance exchanges, that there is a gem.”

Pressure for the steering committee to “stand down” didn’t come from just the Legislature alone.

“Our fellow legislators, and many of my constituents, by the way, are saying, ‘What are you doing?’ you know. ‘This is a bad law, it’s going to be struck down.’ I, by the way, signed a letter encouraging the governor to join that lawsuit primarily because of the individual mandate,” steering committee co-chairman Sen. Bill Landen (R-Casper) told WyoFile.

If the health insurance exchange mandate survives the Supreme Court review, Wyoming’s steering committee will have to rush to re-apply for federal funds to continue the work, and rush to meet a deadline of October 1 to report to the Joint Labor, Health and Social Services Interim Committee. Harvey, who also co-chairs that committee, said she will instruct that body in May to come up with a contingency plan. In addition, Harvey wants to have a grant application filled out and ready to go should the exchange mandate remain intact when the Supreme Court rules on the ACA this summer.

Outlook for a Wyoming exchange program

For now, Wyoming’s Health Insurance Exchange Steering Committee is still charged, under Senate File 58, with exploring three options:

— An exchange based on Wyoming data without any influence from the ACA and the federal government.

— An exchange driven by Wyoming-specific data, which still meets terms under the ACA, as a partnership between Wyoming and the federal government.

— And a federally-managed exchange, requiring very little data or management from Wyoming.

The idea of an exchange is to pool enough enrollees to compel health insurance providers to compete for their business. To compete under the current ACA mandate, providers’ plans would have to meet minimum “essential benefits” and adhere to a cap on deductibles. Individuals and employers could then compare plans side-by-side. A Congressional Budget Office report indicated that the transparency and competition fostered through an exchange could reduce costs for doctors and insurance buyers, cutting premiums 7 percent to 10 percent.

But a major challenge to creating an exchange in Wyoming is its low population of 568,000. A study commissioned by the Health Insurance Exchange Steering Committee suggested that 38,000 to 41,000 Wyomingites might enroll in an exchange, either individually or through their employer. About 61 percent of those enrollees would have previously been uninsured. At 38,000 to 41,000 enrollees, the administrative cost to run the health insurance exchange would be an estimated $132 per enrollee per year — in addition to actual insurance premiums.

Some believe that’s too costly, while others say it may still yield considerable savings by bringing pressure to bear on quality of health care service and transparency throughout the health care system.

“Some people feel that’s very high, some say it’s reasonable, and some say it’s low,” said Anne Ladd. “I think it’s a good starting point to start the discussion on this.”

Terry Gardnier is vice president of policy and strategy for the advocacy group Small Business Majority. He spoke about insurance exchanges at a forum in Casper last week organized by the Wyoming Business Coalition on Health. Gardnier said to keep administrative costs of a state-run health care exchange program to about 3 percent would require a minimum 100,000 enrolled individuals. Few disagree that that level of enrollment might be impossible in Wyoming, which is why many people are interested in looking into multi-state exchanges.

Low enrollment numbers were one major factor in the Legislature’s decision this year to pull the plug on Wyoming’s pilot health care program, Healthy Frontiers, aimed to serve the state’s lowest income families. Harvey said she believes that enrollment criteria for Healthy Frontiers were too restrictive. But she does worry about how much market influence Wyoming can have at about 40,000 enrollees.

“We’re awfully discouraged in our investigation because of the cost to the consumer in the individual market and for the cost to small businesses and their employees,” said Harvey.

Another difficulty is that the federal government hasn’t yet spelled out what it will require as “essential care” minimum standards in packages offered in insurance exchanges.

Ladd noted that Wyoming’s preliminary estimates of enrollees were conservative, and the estimated cost was a “worst case scenario.” Ladd said she expects the costs of an exchange could be more than justified in not only savings from competition, but also in greater accessibility to Wyoming purchasers.

“I think there are a lot of false barriers out there, and with a lot pressure we can knock down those false barriers,” said Ladd. “And I think health care is the most important thing we buy.”

Wyoming businesses get onboard

Steve Loftin, president of Casper-based 71 Construction, says the cost of employee health care for his company has grown to 2.9 percent of the company’s costs, taking a serious bite out of the 3.5 percent to 5 percent profit margin. Last year, 71 Construction — which employs 58 to 95 workers depending on the season — spent about $450,000 on health coverage. Loftin said he’s had to shift the growing cost of health coverage to his employees just to hold the company’s portion to $450,000.

“What I suspected was some of my competitors were dropping health care altogether to get a competitive advantage,” Loftin told WyoFile. Loftin said he wanted to gain a competitive edge in the construction market by finding more affordable, quality health care coverage. As he researched the market he discovered the Wyoming Business Coalition on Health. Unable to say ‘no’ he now serves as the group’s chairman, he joked.

The Wyoming Business Coalition on Health includes about 12,000 workers and about 27 employers from a wide range of businesses, such as Arch Coal, Peabody Energy, Natrona County School District and the City of Casper.

Loftin said the group’s goals are pretty simple; find ways to make health care and insurance more affordable with or without the help of federal and state lawmakers.

“The Wyoming Legislature has been at it (health care) four or five times,” said Loftin. “I’m disappointed in their (Wyoming Legislature’s) efforts over the years, and so I’m ready to be disappointed again.”

The coalition organized a forum in Casper last week titled, “Health Reform Is Your Business.” Speakers addressed health insurance exchanges and how to create more transparency in health care services.

Leah Binder is CEO of the Leapfrog Group business advocacy organization backed by General Electric, General Motors, Boeing, Ford and other big employers. She said many people underestimate the cost savings that can be had by demanding more transparency.

“There are two things we haven’t really done enough of to address (cost of health care services); transparency and competition,” Binder said. “We do not have them the way other industries have them.”

Leapfrog has conducted some voluntary surveys of Wyoming hospitals to begin offering up-to-date cost comparisons for Wyoming health care patients. Early-elected births are a major source of concern, Binder said, because they usually result in extended infant care. One Wyoming hospital reported that more than 80 percent of all births were early-elected.

Loftin said the information that the coalition gathers is available to the steering committee, and he hopes others continue bring good data and good ideas to the table, too. But he still isn’t going to wait for the state to take the lead.

“They’ve got stacks of excellent studies down there (in Cheyenne), and they never get to them. And this will be another one of those,” said Loftin.

— Contact Dustin Bleizeffer at 307-577-6069 or dustin@wyofile.com.

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