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Serious Questions About D.C.'s Proposed Health Care Exchange

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Whether or not the mandate for health insurance in the Patient Protection and Affordable Care Act (ACA), colloquially known as Obamacare, will pass muster with the Supreme Court many states including the District of Columbia are moving ahead with plans for their Insurance Exchanges. These are the plans that Congress mandated each state have available for people to purchase insurance if they are mandated to get it and don't have other affordable options. There are currently about 14 states moving quickly to have these exchanges in place.

In preparation for putting into effect the (ACA) the District of Columbia Council passed legislation creating an Exchange on December 20, 2011. Tasked with the implementation of the Exchange was the D.C. Health Reform Implementation Council (HRIC), an advisory council that is to recommend policy to the Mayor. The HRIC is scheduled to vote on final recommendations on May 17th.

The problem with the pending final recommendation for establishing and running a Health Benefits Exchange appears to be that the recommendation is harmful to individual consumers and small business. The plan, as proposed, would eliminate the insurance market outside the Exchange marketplace. It would require that all small employers and individuals in the District purchase their insurance via the Exchange. The coverage that individuals and small groups have today would no longer be available for purchase and only the limited number of health benefit plans that meet ACA requirements and are approved and offered through the D.C. Exchange will be available.

That could mean that plans for less than 10 people, like the ones many small businesses and not-for-profit associations in the District currently insure their employees, would no longer be available even if the businesses and employees are totally satisfied with the plan. Clearly this was not the intent of the ACA.

The HRIC's recommendations appear to limit choice and competition among plan options and would disrupt coverage for current policyholders and potentially lead to higher premiums due to less competition. This dismantlement of the existing insurance market in the District could create disruption for individuals and small employers who have coverage today both in terms of financial and administrative burdens associated with a market upheaval and increased premium costs.

Currently D.C. has a very low rate of uninsured individuals. A rate much lower than the national average. Why would we dismantle this highly functional existing system to mandate all individuals and small businesses purchase coverage from a new, unproven Exchange market.

The states that have passed Exchange enabling legislation over the past two years have seen the Exchanges as a supplement to, not a replacement for, the existing market. There is recognition of the importance of maintaining the private health insurance market beyond the Exchanges as one vehicle to access coverage.

A report for the District prepared by Mercer Consulting indicates that it is anticipated that small employers will drop coverage due to the unsustainable premium increases resulting from the merger of these two separate markets. Currently Massachusetts is the only jurisdiction that has merged the individual and small group market. While the Massachusetts experience can be instructive, it is unlike the majority of the states and the District in that it had the same regulatory requirements for the individual and small group markets prior to the merger.

It would appear that the recommendations of the HRIC go against the intent of the ACA. The recommendations seem to reduce competition; disrupting coverage and care; which could actually lead to increasing costs for consumers and businesses. The ACA speaks to empowering consumer choice and continued operation of a market outside the Exchanges. Specifically, the law says: "Nothing in this title shall be construed to prohibit: (A) A health insurance issuer from offering outside of an Exchange a health plan to a qualified individual or qualified employer; and (B) A qualified individual from enrolling in, or a qualified employer from selecting for its employees, a health plan offered outside of an Exchange." It appears that the recommendations of the HRIC are not in sync with that concept.

The HRIC will accept public comments on their proposed recommendations until May 11th through their website http://healthreform.dc.gov/DC/Health+Reform/About+Health+Reform/Implementation

In addition it is suggested that comments be sent to members of the D.C. Council and Mayor Gray in order that this issue is fully examined before any final decisions are made.