Last week was filled with discussion of Gov. Rick Perry’s letter rejecting an expansion of Medicaid that would cover about 1.5 million uninsured Texans. Largely overlooked was the fact that Perry also ceded authority to the federal government to operate a health insurance exchange in Texas. A health insurance exchange is a marketplace in which qualified health plans are offered for sale to individuals, families and small businesses in an organized, user-friendly fashion that enables consumers to compare features and prices of private health plans as they shop for coverage. The Affordable Care Act, which is the law of the land per the Supreme Court’s opinion, requires the operation of an exchange in each state. States are encouraged to establish and operate their own exchanges and if they fail to do so, the federal government will do it for them. As the Houston Chronicle reported last year, state representative Dr. John Zerwas introduced legislation to establish a state-run exchange, but dropped it when Perry said he’d veto it. And Texas returned $900,000 of the $1 million it received to establish the exchange. The politics of Perry’s anti-ACA position are well known, but what about the policy implications of his refusal to create a Texas-run exchange?
Interestingly, Perry’s refusal to set up an exchange goes against the recommendations and interests of the insurance industry and consumer groups. America’s Health Insurance Plans and the National Association of Health Underwriters, the major health insurance industry advocacy associations as well as the Center for Public Policy Priorities, a group advocating for low and moderate income consumers, all believe the state should set up its own exchange. These groups understand the fact that there will be a Texas exchange and, while approaching the matter from very different perspectives, all agree that it will be better for Texas to run its own exchange. This is because there are many decisions that will be made as the exchange is developed, and both the industry and consumers believe they will be better served if those decisions are made by people already operating in this space in Texas. The kinds of decisions that must be made include the most basic question of the nature of the exchange: will it follow the “active purchaser” model of Massachusetts, where the state-run exchange actually manages the competition and negotiates prices and product offerings or will it follow the “market organizer” model, like Utah, where the exchange acts as a clearinghouse for qualified plans and market forces take the lead? Knowing Texas, I suspect we’d opt for the “open marketplace” model, but now that decision will be left to the federal government. The Texas exchange will also interface with the state’s Medicaid and CHIP eligibility system, and the ability to coordinate and control the interface is in Texas’ interest. And the exchange will operate alongside the existing health insurance market — which means there will be two sets of regulators overseeing the health insurance market, increasing the chance of inconsistency and confusion among health plans and consumers.
It’s not too late for Texas to reverse course, but time is running out. The exchanges must be operational on Jan. 1, 2014. States must receive federal approval of their plan by Jan. 1, 2013. Perry can direct the appropriate state agencies to establish the exchange through an executive order. An exchange is coming to Texas — the governor has to power to make it our own or give control to Washington. Here’s hoping he changes his mind.
Elena M. Marks is the Baker Institute Scholar in Health Policy and the chair of the board of directors of Community Health Choice, a nonprofit organization serving more than 200,000 members. She is an attorney with a master’s degree in public health and currently works as a consultant to the health care industry. From 2004 through 2009, Marks served as the director of health and environmental policy for the City of Houston.