by Matthew Valeta Health Policy Fellow
The holidays are coming up which of course means you will soon be throwing a holiday party. As any good host knows, there are two essential ingredients that will make your holiday party full of cheer: (1) make sure that everyone gets there when the party starts and (2) don’t let the party end too early.
Like a holiday party, Colorado’s Exchange is all about timing for its participants. Colorado is moving full steam ahead with health reform and is planning to open the Colorado Health Benefit Exchange (COHBE) on October 1, 2013. In Colorado’s Exchange individuals and smalls businesses will be able to shop for and compare health insurance plans. Many individuals and businesses will be eligible for tax credits to help them purchase health insurance from the Exchange.
On November 26th the COHBE Board voted on two issues affecting health plans entering the Exchange:
1. Should there be a waiting period for plans that do not join the exchange in October 2013? (When the party starts!)
2. Should there be a waiting period for plans that voluntarily or involuntarily leave the Exchange? (Leave the party before it’s over!)
Just like your holiday party, COHBE needs to figure out how to get participants and health plans to participate in the Exchange on opening day and to stay so that Exchange consumers have choice and consistency. The Exchange needs enough health plans to join the Exchange in order to foster a competitive marketplace, making it more likely that consumers will find the coverage they need at affordable rates. However, if health plans join the Exchange right away only to avoid a waiting period, they could leave rather quickly if there are no consequences to leaving the Exchange. Health plans leaving the Exchange would leave consumers behind and in need of a new health plan. Unfortunately, a healthy supply of eggnog will not be enough to solve this problem.
Should there be a waiting period for plans that do not join the exchange in October 2013?
The COHBE board decided that these health plans would not be able to sell plans on the Exchange for a year after the Exchange’s next open enrollment, which means October 2015, creating an incentive for plans to join the exchange right away. There are other incentives for plans to sell in the Exchange right away. Many uninsured Coloradans will need insurance to satisfy Obamacare’s individual mandate requirement, so potentially many will go the Exchange where they can get tax credits and subsidies based on their income. Hopefully plans will sell in the exchange immediately for the opportunity to sell to these thousands of new customers.
Should there be a waiting period for plans that voluntarily or involuntarily leave the Exchange?
The COHBE board decided that plans that leave have to wait 3 years before it can return. A plan leaving in 2013 could not sell plans on the Exchange again until October 2016. The reason for this decision is that consumers need a stable Exchange so they can access the coverage they need. If plans are in and out of the Exchange consumers could face price volatility and could be left without an adequate provider network. This 3-year waiting out period will hopefully keep plans from jumping in and out of the Exchange marketplace.
All in all, the COHBE Board’s decision provided a balanced approach to get plans to come to the party, and stay long enough for it to work. These requirements of plans will give consumers a better shopping experience when the Exchange starts making its sales in October 2013.