Wednesday, April 4, 2012

The U.S. Supreme Court is debating whether the Obama administration's Affordable Care Act is constitutional. How will that decision affect the development of health insurance exchanges?

This is a very appropriate and timely question. Here in California and in other states who want to control their own HBIE time and money are already being invested into establishing HBIEs.

Not well understood is that the federal government grants only run until 2014 when HBIEs are mandated to be self sustaining. At this point the stakeholders have little financial skin in the game. That means taxpayer dollars are being expended for something that may not develop. The Obama administration has spent $729 million laying the groundwork for health insurance exchanges, according to a White House report published this morning. That number will likely tip over $1 billion in the coming months,

The Health Insurance Exchange are designed to form a financial means to support the entry of non insured and underinsured into the health market. This forms the underpinnings of uniform and mandated coverage.

At issue is whether the Obama administration overstepped itself in passing the 2010 Patient Protection and Affordable Care Act (PPACA) and mandating that all citizens purchase health insurance by 2014 or face a penalty.

The Commerce Clause of the Constitution rules that Congress is the branch of government that regulates commerce, and the states are arguing that the administration's ACA violates this clause by mandating that states be forced to implement HIXes. All states must set up HIXes by 2014, according to the ACA. If states are no longer required to set up the HIXes, the exchanges may not take off.

According to a March 26 Harris Interactive poll, 51 percent of the public would like to see this mandate to purchase insurance repealed. In the survey, Americans were split on whether they support the ACA overall. Of those polled, 36 percent support it, 41 percent oppose it and 23 are unsure.

What the White House doesn’t highlight are states that haven’t bought in — those that have resolutely resisted setting up an exchange. Florida, Louisiana, Texas and others have committed to not moving forward on implementation until the Supreme Court rules on the health reform law’s constitutionality. Two years after the health reform law passed, many states are taking a wait-and-see approach: As the above map shows, 22 states are still studying their options on health insurance exchanges.


Health Information Technology Fallout

At the same time this judicial battle is occuring, the HIT industry is ramping up for web portals for consumer choices. Some of these companies are implementing Travelocity-like HIXes powered by technology from companies such as Adobe, Microsoft and Oracle. This sounds much like Expedia, Kayak and other platforms that can easily be modified into health exchange data bases.

The Adobe Digital Enterprise Platform (ADEP) incorporates Adobe's PDF reader to produce welcome kits and digital signatures for health insurers that offer plans in the Web-based exchanges.

Meanwhile, Oracle's HIX platform includes a built-in rules engine to allow states to meet federal eligibility requirements. The Oracle platform is built on the Fusion Middleware application infrastructure.

Microsoft's HIX platform allows states to determine enrollment and eligibility, and it provides tools for business intelligence and case coordination.

In addition, vendors have been introducing software that allows health care companies to get reimbursed for expenses based on quality of care, or outcomes, rather than getting paid per visit.

The ACA as a whole is unlikely to be ruled unconstitutional, but the mandate for buying insurance could be, said Shah. Business models for HIX platforms may need to be tweaked if individuals and small businesses aren't required to buy health insurance, he noted.

"If the insurance mandates are unconstitutional, then the demand side for HIXes goes away, and the government would need to figure out where to get the money for exchanges," said Shah. "I think HIXes could still survive, but they'd need to be reworked quite a bit."

He noted that the government may raise taxes on businesses to pay for Web-based HIXes without a mandate for citizens to join .

It makes sense that many states have delayed their HIXs until the smoke settles at the Federal level.  HIX planning may be premature, even though the deadline looms.

States are already heavily challenged managing what exists now…medi-caid, state disability programs and more. 

Introducing further chaos for the states is a mis-directed political move.  The court may rule sooner than June, and a two month wait is not very long.

States should cool their “heels” a bit longer.

Health Train Express provides the personal opinions of Gary M. Levin M.D., a lone wolf in the wilderness of healthcare.  Comments are always invited, either here or a tweet to @glevin1


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