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Health Benefit Exchange Board Approves Transition to Competitive Insurance Market

Wednesday, March 13, 2013
The panel also backs standards for health network adequacy and benefit standardization.

The DC Health Benefit Exchange (HBX) Authority today unanimously approved a two-year transition to a health insurance market in which insurers will compete for business based on price, quality, and choice.

By 2016, all insurance products sold in the individual and small group markets will be available through a web-based portal that will allow individuals, families, and businesses to shop, compare, and choose the coverage that best suits their needs and budgets. Insurers will display their prices, benefits, quality ratings, provider networks, and other vital information so that consumers can make side-by-side apples-to-apples comparisons. Such market transparency will help stabilize costs for employers and individual consumers.

 “When insurance companies compete in a transparent market they are much more likely to price their products in a more consumer-friendly manner,” said Mohammad Akhter, M.D., the chairman of the HBX Authority Board. “People who live and work in the District should have a wide choice of quality health plans at affordable prices,” he added.

The current DC insurance market is not competitive. One insurer controls more than 75 percent of the market, benefits are uneven, and premiums often jump by 10-to-20 percent a year. Under the federal Affordable Care Act, most insurance sold in 2014 must change to include better benefits and eliminate insurers’ ability to deny coverage to people with pre-existing medical conditions, place annual or lifetime caps on benefits, or charge higher premiums to those in less than perfect health. The transition plan approved by the Board will help employers and insurers manage these changes.

Under the transition plan:

  • Currently insured small businesses wishing to stay with their current insurance carrier or change to a new carrier can transition to the new market over a two-year period. In 2015, renewals of these policies will be through the web-based Exchange portal;
  • Small businesses that want to buy coverage for their workers for the first time in 2014 will do so through the Exchange portal; some will receive federal tax credits to lower their premium costs;
  • Consumers currently covered in the individual insurance market and those buying coverage for the first time will purchase those policies through the Exchange portal beginning in 2014 and receive federal tax credits due them; and
  • All plans sold outside of the Marketplace Exchange during the two-year transition period will be required to comply with all of the requirements applicable to coverage sold through the Exchange portal.

“The current insurance market in the District lacks the kind of competition that drives down costs and improves choice for people, families, and small businesses. One big marketplace will give small companies the clout that large companies enjoy today,” said Mila Kofman, J.D., the Authority’s executive director.

Kofman developed the transition plan with advice from the Authority’s Standing Advisory Board, a multi-stakeholder group of insurers, brokers, consumer and patient advocates, physicians, and others. That group held three public hearings and received input from individuals and organizations.

The Board also approved a series of policy recommendations setting rules for insurers participating in the DC Exchange. Those policies were developed by a set of working groups made up of dozens of stakeholder representatives. These include:

Network Adequacy.  In 2014, health insurers will need to attest that their provider networks are sufficient in number and types of providers to ensure that all services will be accessible to patients without unreasonable delays. The Exchange will also collect and evaluate network adequacy data to develop District-specific standards.

Benefit Standardization.  Insurers will be able to offer additional benefits that go beyond the “essential health benefits” required under federal law.

Health Plan Certification. In 2014, health insurers will be able to provide written attestations that they meet the federal requirements for such things as state licensure, marketing, quality and network adequacy, and accreditation. The District’s Department of Insurance, Securities and Banking (DISB) will verify attestations and regularly monitor carrier and QHP compliance. 

Premium Collection.  The Exchange will collect payments made for a person’s initial enrollment and then pass that money to the insurer chosen by the person. After that first month, premiums will be paid directly to the chosen insurer.

Coverage for Certain Individuals. The Board recommends that the Department of Health Care Finance (DHCF) recommend to the Mayor and City Council that eligibility rules for the D.C. Healthcare Alliance be amended to allow people not eligible for coverage through the Exchange be able to enroll in the Alliance coverage.

 “Today’s decisions ensure the DC Exchange is on track to successfully open for business this fall to serve the critical needs of the people and businesses of the District,” Board Chairman Akhter said.

For more information about the approved policies, visit www.dchbx.com

BACKGROUND: The Executive Board of the Health Benefit Exchange Authority was established as a requirement of Section 6 of the Health Benefit Exchange Authority Establishment Act of 2011, effective March 2, 2012 (D.C. Law 19-0094).

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