The Illinois Senate Insurance Committee passed a measure Wednesday that looks to establish a state-run health insurance marketplace for small businesses and individuals as part of President Barack Obama's Affordable Care Act of 2010.
Some health care and consumer advocates are pushing for a state-based insurance exchange, but questions still remain on how to make the marketplace the best it can be.
"We're walking into a new territory. We haven’t been here yet," said Brigid Leahy, director of legislative affairs at Planned Parenthood of Illinois. "But at least we know that if we're running things at the state level, we can fix things, we can make them better, we have better control over making sure that it works for consumers. If it’s in the hands of the feds, we don’t have that power."
The Affordable Care Act, which fully kicks in on January 1, 2014, aims to expand health coverage to the uninsured. The creation of new marketplaces, or exchanges, where people can purchase private health insurance is central to the health care reform law.
Under the act, each state needs to have a new marketplace ready and running by January 1, 2014 to help individuals, families and small businesses compare insurance prices and find coverage. Nearly one million Illinoisans are estimated to be eligible for coverage under the exchange by 2014, according to the state.
Illinois is currently partnering with the federal government for its health insurance exchange. State residents will be able to buy insurance via the exchange starting in October.
Gov. Pat Quinn says he plans for the exchange to be state-run by 2015, but legislation that sets up the marketplace needs to be approved first.
Legislation that passed the senate committee Wednesday, HB 3227, formerly SB 34, would phase out the state-federal partnership and give Illinois control over the online exchange on October 1, 2014. State Sen. David Koehler (D-Peoria) is the main sponsor of the bill.
Operating Illinois' state-based insurance exchange is expected to cost $54 million to $89 million, according to the Campaign For Better Health Care (PDF). The pending legislation would mandate that Illinois health insurance companies help cover those costs.
Under the measure, Illinois' Department of Insurance would be charged with evaluating and recommending the coverage plans made available in the exchange, with the plans having to comply with state and federal insurance guidelines.
The bill would put a diverse, 11-member governing board in place that would be tasked with certifying the plans the insurance department approves.
The board will not, however, have the power to say 'no' to a health care plan because the rates are too high, said Jim Duffett, executive director of the Campaign for Better Health Care. He said he wished that was the case, but such a bill would never pass. That's an "unfortunate political factor of life," he said.
"From labor to women to people of color, there's a slot for each board member, and so there is representation that will be on the board to try and represent consumers and to do right by them," Leahy said.
The marketplace would be a quasi-governmental entity. Under the legislation, the governor would make appointments to the governing board in staggered terms. The Senate would have to approve the appointments.
"There is a little check and balance," Leahy said. "The governor doesn’t have complete power to appoint, because he has to deal with the Senate. The legislature doesn’t have complete power either. They have to deal with the governor."
When it comes to the appointments, Duffett said it remains to be seen whether the governor is on the consumers' side, or if he's going to "play politics."
But at least one local consumer advocacy organization is not sold on the legislation just yet.
Brian Imus, Illinois PIRG's state director, said there needs to be a "big wall" set up between politics and the state-based exchange.
"Customers and small businesses should feel confident that if they go shopping using the exchange that it's there to operate for them, not based on who’s governor or what's happening in Springfield," he said.
Leahy said Planned Parenthood of Illinois serves many women who are uninsured and do not have access to health insurance.
"If you try to go out on your own alone to purchase health insurance it’s completely unaffordable," she explained.
The exchange would create a huge pool where insurance providers will compete with each other for the business of the uninsured, she said.
"That creates a great opportunity for our patients," Leahy added.
Duffett said the new marketplace will also offer small businesses access to more affordable health insurance plans.
"Instead of paying 18 percent more than larger businesses, they will have a chance to compete for and retain good employees by providing affordable insurance," he said.
Under the measure, small businesses with less than 50 employees will be able to access health and dental plans via the exchange in 2014. Businesses with up to 100 employees will be able to shop the marketplace in 2016.
Imus said it's crucial that the exchange operates for the benefits of consumers and small businesses. But he said the way the bill is written, the exchange is not set up in a way that addresses costs or negotiations for a better deal for consumers.
"The insurance exchange does not have right now the powers to do the kind of rate review that I think some advocates would like, however a federal exchange is not going to engage in that either," Leahy added. "If we have a state exchange, we can build on the powers of the exchange and maybe get to a point where there will be greater control over the costs."
Duffett says that if there's anything that’s not in the bill, it's rate review.
"If anyone has the ability to convince Speaker Madigan to go against the insurance industry, go for it. That would be great," he said.
Imus believes the bill leaves the state-based exchange open to "political meddling" in the future.
"Which doesn’t make sense when you’re working to set up a competitive insurance marketplace," he said.
For example, the marketplace's budget would have to be approved each year by the state legislature, not the governing board, he pointed out.
"That’s a little unusual compared to what other state-based exchanges are doing in other states," Imus said. "And the reason that doesn’t make sense [is] the money generated to operate the exchange is coming from the insurers, and ultimately the consumers that are benefitting from the state-based exchange."
Therefore the board should be determining and setting the budget, he said, because the board is there to operate on behalf of the consumers.
"The money should be separate from the political process," Imus stressed.
SB 43 folded into HB 3227 as part of a political maneuvering process to move the bill more quickly through the legisture before the session ends on May 31, Imus said.
The bill will now have to go up for a full Senate vote. If approved, the House would have to agree to the changes that were made to the bill before sending it to the governor's desk.
"They’re rushing through a really big bill really fast, and that’s unfortunate," Imus said.
The governor's office is neutral on the bill, he added.
The governor's office did not return Progress Illinois' request for comment.
Leahy said the legislation could be revisited in coming years if the exchange has problems. And in regards to political meddling, she said that can happen at any level.
Obama can no longer be re-elected, so there could be political meddling at the federal level after the next election, she noted.
"I think anytime that you have a government entity trying to do something like this, there’s always going to be a situation with politics, and we're just going to have to be vigilant with [overseeing] that," Leahy said.