State insurance exchange building its foundation

The Silver State Health Insurance Exchange, an embryonic state agency that will become much better known to Nevada residents a year from now, has started building its foundation.

This week, exchange board members voted to recommend that the state insurance commissioner pick one of three "essential benefits" plans for policies that will hit the market on Oct. 1, 2013. The plans set minimum coverage levels that exchange-marketed policies, underwritten by private companies, must include.

The exchange started with 10 plans but eliminated seven for the potential expense to carriers and consumers or for the millions of dollars in added outlays that could be forced on the state government, board member Dr. Ronald Kline said.

Insurance Commission Scott Kipper has until the end of the month to forward a final selection to U.S. Department of Health and Human Services, which has the final say.

While the terms resemble many health insurance plans currently available, exchange director Jon Hager said, there were differences in the details. One plan would cover the costs of hearing aids while another included more comprehensive benefits but at a higher price than the others.

The exchange and its state counterparts across the country have been touted as a linchpin of the Patient Protection and Affordable Care Act, commonly known as Obamacare.

With the help of federally subsidized premiums, they are supposed to help individuals and small businesses buy insurance by creating a more affordable and visible outlet than in the past.

Starting in February, insurance companies will submit rates and plan terms for the approval of the state Division of Insurance. The division must calculate whether the proposed policies make financial sense to avoid an unstable market or insolvencies that would leave policy buyers with no coverage.

At the Sept. 13 board meeting, chair Barbara Smith Campbell said that in several key areas, the exchange follows a philosophy of holding down the regulation initially but keeping the option of tightening it in the future, if necessary.

The board decided not to force insurance carriers to offer policies to both individuals and small businesses out of the concern that they might avoid the exchange entirely. Hager said individual policies are expected to be the most popular.

Massachusetts, by contrast, has written a much thicker rule book for its exchange, created several years ago under a state health insurance law, Hager said.

Likewise, Nevada insurance companies will enjoy considerable leeway in setting terms for co-payments, deductibles and benefits added to the base package.

The exchange website will include a calculator designed to help consumers figure out their actual cost when the plans go on sale in a little more than a year and take effect in 2014.

As startup funding, the exchange has secured $74.8 million in federal grants, enough to carry it through the end of 2014. Financial projections show the exchange sustaining itself primarily through insurance company fees.

Enrollment is predicted to hit at least 119,000 the first year and to grow after that. People below 400 percent of the federal poverty line, or an annual income of $92,200, will qualify for some premium subsidy to supplement out-of-pocket expenses.

Contact reporter Tim O'Reiley at toreiley@reviewjournal.com or 702-387-5290.