Monday, October 21, 2013

Initial Results for the Health Care Exchanges

By Colin Luke

It has been a difficult few weeks for Health and Human Services Secretary Kathleen Sebellius and the perhaps inaptly named Affordable Care Act. Since the October 1 rollout of the health care exchange national website,, there have been numerous problems and crashes reported by the national media. Moreover, enrollment in health insurance plans offered through the exchanges has been far less than anticipated and far less than required to sustain the program. According to the website, through October 15, “just 36,000 consumers, or one percent of all those who attempted to register for the federal exchange, successfully enrolled in Obamacare”.

Officials in the Obama Administration have reported that to date there have been approximately 480,000 applications filed for coverage under the national and state exchanges through October 20. No one is able to state accurately how many of these applications will actually be approved and how many individuals will eventually receive health insurance coverage. However, it seems hard to believe that the exchanges will produce the seven million new enrollees forecast by the Congressional Budget Office in the first six month period after October 1st.

Alabama’s experience with the exchanges have also been somewhat mixed. Gov. Bentley decided in November of last year that Alabama would not operate its own health care exchange. He cited projected state operating costs of up to $50 million and the need to avoid creating an additional tax burden on the people of Alabama in opting to go with the federal government’s default plan for operating the health insurance marketplace in Alabama.

The Governor had established the Alabama Health Insurance Exchange Study Commission in November of 2011 by Executive Order to study the various options for exchanges in Alabama. Although the Commission recommended Alabama implement a state-run exchange, no bills were adopted by the Alabama legislature to create such an exchange.

The U.S. Department of Health and Human Services reports that Alabama residents have the lowest number of alternatives among the 36 states participating in the federal exchange. Enrollment options are organized by county, and the number of alternatives may vary across Alabama. On average, Alabamians have seven options for health insurance under the exchange. Nationally, individuals have 53 alternatives on average. According to a report by HHS, the mean monthly premium for a bronze plan health insurance policy for an individual in Alabama is $247. The bronze plan is the lowest level of coverage offered on the exchange.

Several insurance companies are offering plans in Alabama under the federally-run exchange. Blue Cross and Blue Shield of Alabama and Humana are offering individual options through the federal marketplace. Blue Cross and United Healthcare are providing alternatives for small business insurance plans on the exchange for Alabama.

According to Health and Human Services, approximately 650,000 Alabamians are currently without any form of health insurance and eligible to use the exchange. To the extent the website is operational, enrollment under the exchange runs until March 31, 2014 and initial coverage can begin as early as January 1, 2014.

Colin H. Luke is a partner with Bradley Arant Boult Cummings where he advises clients with respect to a variety of healthcare and general corporate matters.

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