Under multistate plans recently announced by the Obama administration, health insurance operated under contract with the federal government will be available to consumers in every state through state insurance exchanges mandated under the Affordable Care Act (ACA). While the White House has suggested that these plans will serve as a substitute for the government-run health insurance plan that was discussed, and rejected, during health care reform negotiations, existing insurers and developers of CO-OPs were taken by surprise at the announcement.
The impetus behind these plans is the belief that a government sponsored multistate plan will increase competition in health insurance markets, which tend to be geographically clustered.
In those states and regions in which a single insurer is dominant, the hope is that these plans may lead to competitive pricing where such competition would otherwise be difficult.
While proponents speak of these plans’ promise, others are concerned. The ACA provisions pertaining to these plans do not specify how these plans will comply, if at all, with requirements under various state laws. Generally, issues related to insurance regulation fall under the jurisdiction of state governments. Private insurers worry that if state laws would not apply, these multistate plans may have an unfair competitive advantage over other insurers who are subject to state-specific requirements.
While administration officials stated that for they past three months they have been reviewing rules to be issued soon (Pear, New York Times, Oct. 27, 2012), insurers have been without any regulatory guidance as of yet, and, as mentioned earlier, the ACA provisions have not provided much clarification on how these plans will operate. Given this lack of direction, insurers been unable to prepare for implementation of these plans. Speaking to Sarah Kliff of the Washington Post, John McDonough, a Harvard University School of Public Health professor who worked as a health policy adviser to Sen. Ted Kennedy, said that these plans have the potential to disrupt insurance markets, due to the rushed nature of these discussions. "It’s happened so fast, in a brief window, that there was not a lot of time for robust conversation," he says. "The conversation was like, ‘this is a good idea, let’s cook something up.’ It was definitely not a thoughtful, nuanced conversation."