LANSING – Michigan officials need to move with some dispatch to enact a health exchange in order to ensure the federal government does not impose an exchange on the state, members of both the House Health Policy committees were told Thursday by insurance company executives.

But Republicans questioned why the government should set up such an exchange at all. They also asked what it would take for insurance companies to create an exchange with no government interference.

To that, at least, the executives said the state would have to change its current regulatory structure.

And while questioning from committee members focused mostly on the why of creating the exchange and worries about how much it could cost the state, committee chair Rep. Gail Haines (R-Lake Angelus) also issued a statement saying it was important that any exchange created not add to the overall cost of health care in the state.

Under the Affordable Care Act, the controversial federal health care act passed in 2010, each state has to institute a health care insurance exchange where individuals and small companies can shop for health care insurance. The exchange would have to start business on January 1, 2014.

If a state does not create an exchange, or fails to make what is considered to be sufficient progress in creating an exchange, then the federal government will take over the process of creating the exchange. Approximately a dozen states have created or are in the process of creating an exchange. In as many as six states, the governor has refused to deal with an exchange.

David Bilardello of Priority Health and Kirk Roy, vice president for national health care reform for Blue Cross/Blue Shield of Michigan, both told the committee it would be far better for the state to have its own exchange then have one imposed on the state.

They also suggested that an exchange should start simply and then add complexity. They also said it should be able to co-exist with the current market, and promote competition, and that the exchange be able to work with other market forces.

They also said there should be limited time for enrollment, to avoid situations where individuals do not sign up for coverage until they are actually sick.

While individuals would have to pay for the insurance, and the exchange is supposed to be self-supporting, lower income individuals will be eligible for federal subsidies. Persons and families with incomes of up to 400 percent of poverty – which in the case of a family of four could mean incomes of as much as $80,000 – could qualify for the subsidies, which raised eyebrows among some committee members.

Rep. Paul Opsommer (R-DeWitt) said the exchange requirement made it sound as if he were being told he could buy a car in a year, but the government would tell him what kind of car he would get.

That the federal government was to subsidize low-income individuals did not assuage his worries, “when they are $14 trillion in debt.”

Rep. Thomas Hooker (R-Byron Center) said the state already has a health insurance exchange, “It’s called the free market.” He also blasted the national legislation as saying the state must do what the federal government requires, or it will take over.

But the executives all said that when it came to providing coverage to individuals and small companies, the market is not working particularly well.

They got some cover in that from Rep. Mike Callton (R-Nashville) who said it was impossible for his small business to find affordable health insurance for his workers. “We needed a health care exchange before we had the national health care act,” he said, although he added that he opposed the individual mandate provisions and other aspects of the act.

Rep. Mike Shirkey (R-Clark Lake) wanted to know what stops the insurance companies from setting up a similar exchange on its own, and was told there are essentially three different sets of regulations – the Blues Act, the Insurance Code and separate regulations for health maintenance organizations – that make it difficult to set up an exchange.

Both Shirkey and Haines urged the companies to provide guidance on what changes would be needed so they can establish their own exchange.

This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com

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