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Columbia Missourian

Missouri Proposition E would limit governor's authority on insurance exchange

By Hannah Spaar
November 4, 2012 | 4:17 p.m. CST

COLUMBIA — Missouri's Proposition E won't determine whether a health insurance exchange is established in Missouri, only who will run it.

Proposition E is the latest in a steady stream of legislation and ballot issues in Missouri opposing elements of the Affordable Care Act, the 2010 federal health care law nicknamed "Obamacare." Specifically, the ballot says Proposition E would "prohibit the governor or any state agency, from establishing or operating state-based health insurance exchanges unless authorized by a vote of the people or by the legislature." 

Since Proposition E was introduced, Gov. Jay Nixon has stopped taking steps to create an exchange via executive order. Although a set of plans made it through the state House of Representatives in 2011, it didn't come to a vote in the Senate.

The Affordable Care Act's deadline for plans to create a health insurance exchange is Nov. 16, only 10 days after Election Day. This short time period leads stakeholders to believe Missouri will not be prepared to present a plan in time, no matter the outcome of the vote on Proposition E.

According to the Affordable Care Act, if no plan is submitted, the federal government would open an exchange in Missouri in 2014.

What Proposition E may determine is the state's ability to help shape a federally run Missouri exchange.

A regulated marketplace

A state health insurance exchange as mandated by the Affordable Care Act is essentially a listing of health insurance plans that have been approved for the exchange. The Department of Health and Human Services explains state health insurance exchanges as "a single place where you can enroll in private or public health insurance coverage."

Jay Angoff, acting regional director of the Department of Health and Human Services for Missouri, Kansas, Nebraska and Iowa, gave a keynote speech explaining the Affordable Care Act in October at the Center for Health Policy's Annual Missouri Health Policy Summit. Angoff has had a role in the implementation of the Affordable Care Act.

Much of Angoff's speech focused on health insurance exchanges. He said their effectiveness will depend on the decisions of the regulators.

Angoff said the exchanges will “allow people — individuals — who have never had bargaining power ... to all get together and have the same bargaining power that companies have.”

The Department of Health and Human Services also says this bargaining power will be extended to small businesses.

Angoff explained that the Affordable Care Act mandates that exchanges offer plans at four levels of coverage with the insurer paying 60, 70, 80 or 90 percent of average costs.

Rates within the exchange can only be adjusted individually based on age (with the oldest people charged no more than three times as much as the youngest), location, family size and whether or not the person is a smoker. Smokers can be charged up to 50 percent more than nonsmokers.

Because of these regulations, Angoff said insurers will no longer be able to change individuals' rates based on other characteristics and health concerns. This allows individuals to buy collectively in the same way employers buy group health insurance for their employees. This, he said, will lower insurance costs.

Jefferson City vs. Washington 

Although the Affordable Care Act dictates some of an exchange's structure, Angoff stressed that whoever runs it will have discretion over the rules. These rules, he said, will determine how effective the exchange is. The question of who will have this authority in Missouri is complicated by Proposition E, because it has delayed Nixon's plan.

Whoever runs the exchange will make decisions on how many plans will be available at each level of coverage, what process will qualify plans for the exchange and what standard benefits must be available in these plans.

Angoff thinks rules regarding competitive bidding and who can enter plans into the exchange will determine the success of the exchange.

There are three general models for how exchanges can be organized: state-run, federally run and as a partnership.

“It’s not all or nothing," Angoff said, explaining the partnership model. He said a common arrangement is for states to handle customer service and for the federal government to make decisions within the exchange.

Even plans for a partnership model need to be filed before the Nov. 16 deadline. With Proposition E on the ballot, Missouri is at a standstill.

The Missourian made several attempts to ask Nixon if he intends to move toward creating an exchange by executive order if Proposition E fails and what preparations are in place in case this occurs. The requests went unanswered.

State Sen. Rob Schaaf, R-St. Joseph, introduced Senate Bill 464, which became Proposition E. Schaaf said the measure is intended to prevent the governor from establishing an exchange by executive order. Schaaf believes that's outside the  governor's power. 

Schaaf said that if he could find the resources, he would sue Nixon if he did create an exchange.

Andrea Routh, executive director for the Missouri Health Advocacy Alliance, warned during the health policy summit that the full breadth of Proposition E restricts not only the governor but also all state agencies. 

The full text of the ballot issue says: "No department, agency, instrumentality or political subdivision of the state of Missouri shall establish any program, promulgate any rule, policy, guideline or plan or change any program, rule, policy or guideline to implement, establish, create, administer or otherwise operate a state-based health benefit exchange described in the federal health care act," without legislative or voter approval.

Routh said even in the case of a federal exchange in Missouri, this may restrict state agencies from assisting the federal government with the exchange's creation.

Polarization resulting in a freeze

"It is a very polarized state on this issue," Joel Ario, former director of the Office of Health Insurance Exchanges at the U.S. Department of Health & Human Services, said of Missouri during an Oct. 18 Association of Health Care Journalists webcast on the fate of health insurance exchanges after the November elections.

Ario predicted Missouri Republicans may be some of the "last to come around" to health insurance exchanges as "it's been very good politics for the Republicans to get more and more radical." Ario said, when faced with the idea of federal exchanges, however, Republican state politicians may want to rethink opposing the creation of exchanges.

Cheryl Smith, former director of the Utah health insurance exchange and former visiting health policy fellow at The Heritage Foundation, said during the webcast that while at Heritage, she advised "red states" to plan for the exchanges even if the politicians are against the Affordable Care Act. She said it would be better to have a role in creating an unwanted institution rather than be kept out.

Schaaf did not want to share his opinion about whether Missouri should have a health insurance exchange, but he did not seem concerned with the prospect of the federal government running an exchange in Missouri.

“If there is an exchange, I don’t see that there’s a whole lot of benefit to the state doing it," Schaaf said.

Angoff, Ario and Routh all believe Missouri will have a federally run exchange, at least in the beginning. Over time, Ario said, the state government most likely will be able to retake control of the exchange, but he also said there are those who believe that if states have wasted their first opportunity to be a part of the exchanges, they shouldn't be able to regain control.

"Those who gambled on the (Affordable Care Act) going away have left us in this situation," Routh said of the unlikely ability of Missouri to create a plan before the Nov. 16 deadline.

Of course, Proposition E isn't the only issue on Tuesday's ballot. Ario believes that even if Mitt Romney wins the presidency and Republicans win enough seats in Congress to repeal the Affordable Care Act, its replacement would still include exchanges.

Supervising editor is Katherine Reed.