In a big step to carry out the new health care law, the Obama administration unveiled standards on Monday for insurance marketplaces that will allow individuals, families and small businesses in every state to shop for insurance, compare prices and benefits and buy coverage.
Kathleen Sebelius, the secretary of health and human services, said the insurance exchanges, the centerpiece of the new law, “will offer Americans competition, choice and clout.”
In theory, the exchanges will pool insurance risks and premiums so that individuals and small businesses will have “the same purchasing power as big businesses,” Ms. Sebelius said.
Issuance of the proposed rules shows how President Obama is moving inexorably to carry out his health care overhaul, despite attacks on the new law in Congress and the courts, where more than two dozen states are challenging the constitutionality of a requirement for most Americans to carry insurance.
In principle, liberals and conservatives support the exchanges, which they see as a way to increase the purchasing power of individuals and small businesses, but they disagree on how the exchanges should be configured. The regulations issued Monday, which provide a fair amount of latitude to states, were welcomed by consumer groups, patient advocates and some business lobbyists.
But they may not satisfy liberals who argue that the exchanges should tightly regulate insurance and contract with selected health plans that offer the best deals. And they may not satisfy conservatives who want the exchanges to be wide open to any insurers that want to participate and meet minimum federal standards.
Every state will have an exchange by Jan. 1, 2014. Federal officials will assess states’ “operational readiness” as of Jan. 1, 2013, and will run the exchange in any state that is unable or unwilling to do so.
Many states have been pondering how to proceed, and the regulations will provide guidance. The National Conference of State Legislatures says 12 states have enacted laws to establish exchanges. Bills failed in nine states and are pending in 11 others, the organization said.
The Congressional Budget Office predicts that by 2019, about 24 million people will have insurance through exchanges, with four-fifths of them getting federal subsidies that average $6,400 a year per person. People with incomes up to four times the poverty level (about $89,000 a year for a family of four) will be eligible for subsidies to make insurance more affordable.
Each state exchange will certify “qualified health plans,” provide the public with “standardized comparative information” on costs and benefits, and rate each plan based on the quality and price of care. In addition, the exchange will help people determine if they are eligible for Medicaid or the Children’s Health Insurance Program, or for federal tax credits to subsidize the purchase of private insurance.
Federal officials said they would issue a separate rule later this year specifying the “essential health benefits” that must be offered by all health plans.
Trumpeting the advent of the exchanges, the administration said Monday that they would “give Americans the same insurance choices as members of Congress.” However, in response to questions after a news conference on Monday, health officials acknowledged that this claim was not necessarily correct.
A small employer will be able to pick “a level of coverage” for its employees. A higher level will pay more of the consumer’s medical costs. Under the law, members of Congress must generally get their coverage through an exchange. But a small business could legally choose a level of coverage lower than those offered to federal employees, including members of Congress.
Under the rules, an employer may allow employees to choose any health plan at a given level of coverage. But an exchange may also allow an employer to limit its workers to one or two health plans — far fewer than the number available to members of Congress and other federal workers.
With some states like Florida balking at the new law, federal officials went out of their way Monday to strike a conciliatory note, promising to be flexible. If a state is not ready by January 2013, Ms. Sebelius said, it still might qualify for “conditional approval” if it was on track to operate an exchange by January 2014. In addition, federal officials said, a state could set up and operate its own exchange in 2015 or later years if it is not ready in 2104.