We find ourselves in the middle of one of the greatest wealth transfer periods of all time. Those with wealth must decide whether they want to make transfers, and if they do, they must decide how much, to whom, when and in what structure?
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Thousands of state residents are expected to rush in to enroll, but a lot remains to be done in the next few months including overcoming IT issues, hiring personnel and approvals of insurers wanting to take part.
Officials with the exchange say they’ll be ready, but concerns have been raised about the enormous undertaking the exchange has become, both in terms of manpower and financial resources; more than $62 million in grants already have been dedicated to setting up the exchange.
Compared to many other states, Colorado’s exchange is far ahead. Only 18 states have taken steps toward setting up their own exchanges, which are mandated under the Patient Protection and Affordable Care Act.
Colorado was among the first six states to get federal approval for its exchange. The basic idea behind the exchanges is to create a more organized and competitive market for buying health insurance.
Exchanges will offer a choice of health plans. Not all will qualify, but those who purchase insurance via an exchange will be eligible for government subsidies.
The Colorado Health Benefits Exchange, or COHBE, is planning on opening enrollment when it begins operations on Oct. 1, the date mandated by the federal government for the exchanges to open.
COHBE is planning on enrolling between 75,000 and 150,000 individuals within the first six months. Within two to three years, that number is expected to increase to 250,000, according to Jim Sugden, Small Business Health Options Program exchange manager for the COHBE.
The exchange is in the process of staffing up to deal with the volume, and plans on eventually having 50 to 60 customer-service employees, in addition to 25 or so to handle administrative and IT tasks.
Along with hiring, the exchange is “moving methodically” through the rest of the tasks that lie between now and Oct. 1.
“We do have the capacity to be ready, but there are a lot of different things to do,” Sugden said.
One of the biggest tasks is making sure the carriers that will be involved with the exchange get their plans approved by the Division of Insurance in time. The exchange is working with carriers to help them make it through the approval process.
Carriers must comply with various regulations, as well as make sure that their plans are priced properly, Sugden said. The carriers will be able to submit their plans to the DOI beginning in March, with a deadline of May 1, according to Tom Abel, supervisor of the Rates and Forms section of the DOI. Regulators will have a deadline of July 31 to review the plans.
For its part, the DOI is holding meeting with carriers to make sure that filings are complete so that the process will be as efficient as possible, Abel said. The division will look at protections for consumers, rates and compliance with regulations in the plans.
Between eight and 10 carriers have expressed interest in the exchange, Sugden said.
The exchange, meanwhile, is also assembling training curricula for its “navigators,” consumer advocates and other volunteers who will be responsible for helping people find the appropriate coverage on the exchange.
Local insurance brokers will also be able to receive training, Sugden said. The COHBE is working with subcontractors that specialize in formulating finance-related training programs.
Navigators and brokers must be well versed in the exchange and the plans offered through it. Health insurance has always been a confusing product for consumers, and with the added complication of government subsidies, matters only get trickier.
One of the other big challenges is establishing the technical backbone that will be needed to support the exchange.
While face-to-face and telephone assistance will be available to customers who need it, the exchange will function primarily online, in a manner that has been compared to finding airline and hotel tickets on websites like Expedia.com.
Putting together such a system is no small task. To finance the effort, the state was given a $43.5 million grant from the federal Health and Human Services Department in September to provide the “resources to meet deadline for certification, testing and deployment of systems and operations,” according to the award language.
Coming up with the proper IT systems is one of the big concerns for Colorado Sen. Kevin Lundberg of Berthoud, who sits on the Senate Committee for Health and Human Services.
Similar to the task of establishing any “significant IT system,” Lundberg said that he worries about the exchange’s ability to interface with Medicaid, anticipating that the system may experience problems similar to the Colorado Benefits Management System.
CBMS is the state’s computerized benefits management system that has been plagued with issues for years. The system is used for other benefits, like food stamps, as well as medical aid.
The system went online in September 2004 and immediately began experiencing difficulties; CBMS is still working out bugs today.
On the other hand, technology has made significant advances in the nearly 10 years since CBMS launched, and the state likely learned more than a few lessons from that experience.
“The exchange could possibly be ready in time,” Lundberg said, “but I do have concerns.”
The overall expense of the setting up the exchange is another concern of Lundberg’s. The $43.5 million grant is just the most recent chunk of money given to Colorado to set up the exchange.
In February 2012, just under $18 million was awarded to the exchange to hire more staff and to begin forming the online infrastructure. Before that, $1.2 million was awarded for startup costs.
In total, that is $62.6 million in grants so far.
Lundberg, a Republican, has his doubts about the long-term financial viability of the exchange model, and the Affordable Care Act in general.
“The implementation of Obamacare may or may not be successful,” he said. “I do not expect it to be a long-term solution.”
Advocates, of course, think otherwise.