Asked & Answered: Michigan's Health Care Exchange

By Steve Thorpe

Legal News

The GOP-led Michigan Senate recently adjourned without voting on whether to partner with the federal government on an online health insurance marketplace, rejecting Gov. Rick Snyder's plan to spend a $31 million federal grant on the project. Snyder had said it was essential the lawmakers act because otherwise Michigan would miss the deadline to submit a consumer assistance plan for the exchange without being able to spend the federal money.

The U.S. government will now fully control the website and call center, which is intended to help people shop for required insurance starting Oct. 1 with coverage beginning Jan. 1.

The Legal News talked to Mark Lezotte, a shareholder practicing in Butzel Long's Detroit office and an acknowledged expert on health care law, about the issue. He has substantial experience in corporate, health care, tax, and exempt organization matters, including corporate and nonprofit governance.

Q: What were the options the states had for complying with the health care exchange provision of the law?

A: The exchange could've gone one of three ways: the state taking control and establishing its own, the state determining that it wanted to be in a federal/state partnership, which many states have done, or the state failing to take action by the prescribed deadline, in which case the federal government would step in and we would have a ''federal only'' exchange in Michigan. We've moved down the line from where the governor wanted to be with the intermediate step to the all-federal option.

Q: Gov. Snyder's party originally supported him in 2011 on the idea of a state-run exchange, but that support eroded and the state Senate recently rejected accepting funds for the creation of a joint health care exchange program. Did that surprise you and other experts on health care law?

A: It surprised me a bit. Even the Republicans who were not in favor of the Affordable Care Act in the beginning, I thought they'd want to have an active role in tailoring something to the state rather than ceding control to Washington. I think originally they had pushed consideration of this past the November 2012 election hoping the law might be repealed. But that didn't happen, so I was surprised that they would rather not do anything than have something run at the state level.

Q: What are the major differences for users between Snyder's proposed state-run program and the federal program that we're defaulting to? Especially after the administration announced last week that there will a delay to 2015, rather than 2014, for certain options for small business plans that were supposed to be in the program.

A: It's hard to tell because we're not exactly sure what the look and feel of the federal one is going to be. The essential health benefits package is supposed to be consistent. There are levels of coverage that will be offered in plans with the metallic identifiers Bronze, Silver, Gold and Platinum and those are supposed to be consistent. For small employers, there was supposed to be a choice of competing plans once the level was established, to get some benefit from competition, but as you noted that feature has now been delayed a year. So we're not going to be sure of the differences until we see how the federal government designs the exchange, and this recent announcement shows there's still work to be done. But whatever it is it's not likely to be tailored to what Michigan might want.

Q: The federal government will now fully control the planned website and call center, which is intended to help people shop for required insurance starting Oct. 1 of this year with coverage beginning in January of 2014. Will the state have any input into the process?

A: I think we've really ceded control. It's going to be interesting to see what the feds design and how easy it is for people to access it. There are some open questions: How user friendly it's going to be? How will we educate people to access it and make decisions? It's a great thing to say that you can shop online for these products and choose what you and your family need, but that assumes you have access to a computer, that you have access to reliable information, and that you're educated about you choices. What about low-income residents, senior citizens, and people with disabilities? Does everybody have access to a computer and that information? Is the information accessible and understandable? We're not sure, but the state has essentially given up control of the process.

Q: What sorts of potential legal challenges to the new system by individuals and businesses do you see down the road in Michigan?

A: Much like employer plans, there's usually a deadline. If you fail to meet that deadline you don't get insurance. With this exchange, what if you fail to act because you didn't know there was a technological problem or you weren't given information in a timely fashion? Another possible challenge could arise from people who go in and out of the plan based on eligibility. There are people eligible for Medicaid, which is means-tested. Then there are the traditional large employer plans. The exchanges are kind of in the middle. They're designed for individuals and small employers.

What if someone on Medicaid gets a job and makes too much money to remain on Medicaid? Do you have to let them in the exchange, even if the deadline has passed? Conversely, what if someone's in the exchange and then loses a job and applies for Medicaid? Or what if someone was COBRA for a certain amount of time, and then seeks to buy on the exchange? How will the exchanges be coordinated with Medicaid and COBRA? You're going to get administrative hassles and maybe some challenges from people who bounce back and forth.

Published: Mon, Apr 29, 2013

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