In less than a year’s time, buying health insurance will be much like shopping for a car online, without the giddy excitement about whether to spring for a sunroof.
The new system, required by the federal government, will lay out options for the up to 900,000 uninsured Tennesseans who will need coverage to avoid financial penalties from the federal government. But it will also give small businesses a place to buy insurance and give people who are covered a place to comparison-shop their plans against their employers.
The exchange is expected to launch by October 2013, when open enrollment begins. Health insurance plans will kick in Jan. 1, 2014.
In addition to providing a website for shopping around for insurance, the exchange will determine whether buyers qualify for federal subsidies on their rates — these breaks kick in for those making up to 400 percent of the federal poverty level, or less than about $92,000 a year for a family of four.
But creating a virtual marketplace for health insurance shopping takes more than just popping up a website. It’s going to take a political and policy decision from state lawmakers before anyone can even get started putting it up.
It is a choice many Republican state lawmakers put off this year in anticipation of the U.S. Supreme Court nullifying the Patient Protection and Affordable Care Act over the summer, and in hopes that Republican nominee Mitt Romney would take out President Barack Obama in the presidential election.
Since neither of those events transpired to unravel Obamacare, state lawmakers now have a bundle of decisions to make.
Most immediate on that list is whether it will operate the health insurance marketplace, otherwise known as the “exchange.” The move could be politically twisted against GOP lawmakers, either to allege that those Republicans endorse Obamacare or are giving control to their biggest enemy: the Democrat-helmed federal government.
Thousands of Tennesseans are weighing in on the issue. Gov. Bill Haslam’s staff said they have received some 4,000 emails and 2,000 phone calls about insurance exchanges.
While the staff didn’t break down the email messages to pros and cons, almost all of the phone calls were urging the governor to say “no Obamacare in Tennessee” — a decision that is out of the state’s hands — or ditch the exchange and let the federal government handle it.
Of the rest, about 75 said they were in favor of a state exchange. Another 32 spoke out against the state running it, but changed their stance after the choices were explained, according to the governor’s constituent services staff.
Almost 30 called wanting the state to secede, and eight urged nullification of Obamacare. Six called for a civil war.
In any case, the decision on who should run the exchange is sure to have political overtones when it greets the legislature as it returns next month.
Haslam has until Dec. 14 to decide who will run the exchange. For months he has repeatedly said the state can run the program better than the federal government could, but he has shied away from committing to that route. He blamed the holdup on a lack of information from Washington, D.C., on details of how exactly the state-run exchanges and federal exchanges would work.
For example, the state would have at least some power to choose which health insurance carriers could sell on the exchange, but it’s unclear which details will be up to state officials to determine and which will be prescribed by the feds.
The same goes if the state opts to let the federal government run the exchange for Tennessee. State officials say they have no clue whether that means the state would be totally hands-off or would still have a role to play. In addition, the state could decide to partner with the federal government to run the program.
The feds handed the state $9.1 million in grants to help it do the homework to figure out whether to pursue an insurance exchange. So far, state officials say they’ve spent less than $1.5 million of it, mostly on salaries and benefits for staff researching insurance exchanges, although they say they still don’t have enough details to put forth solid recommendations.
Health insurance providers have also helped look into planning for the exchange, a function they want to see done by the state. According to a spokeswoman for Blue Cross Blue Shield of Tennessee, that’s because state officials understand the local market better than officials in Washington.
Although Democrats in the legislature largely want to see the state run the exchanges, they’re dramatically outnumbered by Republicans in both chambers — many of whom say they’d rather leave the exchanges up to the feds.
“At this point I don’t think there’s a snowball’s chance of that happening,” said Gerald McCormick, majority leader in the state House of Representatives.
“We’re not going to set up a state exchange unless we really have some detailed information on it, and it becomes favorable for the state of Tennessee to do so in a way that cannot be reversed. And I just don’t see that happening, based on past experience with the federal government,” he said.
Senate Speaker Ron Ramsey said he too is leaning toward washing his hands of the exchange, saying it’s “doomed.”
“It’s a catastrophe right now, because they can’t tell you what the rules and regulations are, even if you ask specific questions. And so I just don’t see why we need our fingerprints on this,” he said.
“I won’t disagree with that argument that the states can run it better, if it was truly, legitimately running it. But we’re not going to be running it.”
Even if the governor decides by the Dec. 14 deadline that running the exchange is the best course of action, he’ll still have the daunting task of seeking the legislature’s approval on the issue, which could face pushback from the Republican majority. With all Democrats on board, he would need 22 Republicans in the House and 10 in the Senate to break ranks with leadership.
“Ultimately, our job is to do the right thing for the state. But we also realize we have to pass it in the House and the Senate, and we have to be confident we can do that as well,” Haslam said.
“If we’re convinced at the end that’s the right thing, then it will be our job to sell that,” he said.