A Conversation With Kansas Insurance Commissioner Sandy Praeger
- Nov. 22, 2012
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Gov. Brownback recently announced the state of Kansas will not partner with the federal government to create a state health insurance exchange as outlined in the Affordable Care Act. PoliticalFiber.com reporter Michael Auchard sat down with the state insurance commissioner, Sandy Praeger, to find out what opting out of this partnership means for Kansas residents, particularly young adults and small business owners. Here are some excerpts from that interview.
First of all, what would a state-federal partnership have looked like, and what would it have done for Kansans?
The partnership gives the state insurance department — me and my office — an opportunity to perform some of the key functions of an exchange.
The two (aspects) we would have been able to retain are plan management, which is actually certifying the health plans that meet all of the criteria to sell on the exchange. From a (health insurance industry) standpoint, it’s important to them that we retain that… The other one is consumer assistance — being able to answer questions for consumers the way we do today without them having to call a federal call center. We think that’s very important to the Kansas consumer.
What will happen, in a federal exchange, is the health plans especially are going to be disadvantaged because they will not only file their plans for certification with the federal exchange, they will still have to file with us to have those plans then licensed in the state. The law still requires the plans be state licensed. So, it creates a dual regulatory process that is just going to be cumbersome.
Brownback has said in a statement that he denied the partnership because it wouldn’t benefit Kansans and would have cost millions of dollars. Do you see that as a valid argument against setting up the exchange, especially after he declined a $31 million grant to aid with the process?
Whatever costs are there, they’re going to be there regardless, because it’ll be through our performing the functions – which we would have received financial assistance for. You don’t just perform those functions with state dollars. We would have been eligible to apply for federal grants. The cost is going to be there. It’s either going to be paid for through a full federal exchange or a state partnership. Either way, it would have been federal dollars providing the financial assistance for it. I think it is beneficial for Kansans … to still be able to call our department and have the assistance they need in getting claims paid.
So, since the federal government was going to be paying grants, do you think the argument that it would have cost the state too much makes sense?
I suppose, potentially, there could have been some state expense, but that’s down the road. We didn’t see it as a financial burden on the state, at least for the foreseeable future, because of the federal grants that are available.
You attempted to set up a state and federal partnership. Why did this action fall through the cracks?
The governor was worried that with a lot of new legislative leadership in both the House and Senate, they would have not approved our going forward. I suppose there is a calculated risk there. When we spoke to the governor, the deadline for a partnership had not been extended. It has been now. I’m still hopeful, and our department will still go to the legislature early in their session, sometime in January.
The deadline now to apply for a partnership is the middle of February, so there’s still an opportunity for us. I think with the governor, if we could prevail upon the legislature and they could understand the potential benefit to Kansans and to our health insurance companies in Kansas, there still may be a chance.
How do you see this decision, to only have the federal option, affecting younger citizens, particularly those recently turning 26 years of age who have recently been forced off of their parents’ health care plans?
Well, once they exit at age 26 they’ll have an opportunity to go on the exchange. Probably, if they’re still looking for that ideal job (or are) in a lower-wage position, they’re going to be eligible to receive financial assistance. So whether it’s on the federal exchange or a state exchange, that won’t change. The financial assistance will be available to them and hopefully they’ll be able to retain coverage once they’ve aged off their parents’ policies.
You mentioned the red tape of people having to call a federal phone number to get information. Do you see any other areas where Kansans might lose out by relying solely on the federal option?
No, the benefits will be the same. The essential health benefits will be established based on benchmark coverage in each state. In Kansas it’s going to be the Blue Cross Blue Shield plan that’s the largest plan sold in our small group market. So, the benefits are going to be standardized. There would have been some additional decisions we could have made through our department – and still could make, I guess – if we retain the ability to do plan management. But, I think the essential health benefit option has already eluded us. The federal government has established our essential health benefits for Kansas. I think going forward, we’re going to try and make the most out of all of this.
Again, I’m still hopeful that we’re able to be a partnership state. But, from a consumer standpoint they’re still going to call our department, we’re just not going to have the ability to enforce some of the requirements on the companies. But, I know we’re still going to be there. We’re still going to be getting questions and we’re still going to be trying to assist people. Whether we have the authority to impact the decisions that companies are making remains to be seen. But, we’re going to, as I said, make the most out of this.
With this new healthcare landscape, will any of this affect small businesses or business owners in any way?
There is no requirement on small businesses that they provide health insurance. Large companies will still be required to provide health insurance. If they drop it they have to pay into a fund to help provide subsidies to their employees if they go onto an exchange and receive subsidies.
In fact, there are benefits to small businesses because there are tax credits available to them. Right now, the tax credit is 35 percent of the portion of the premium that the employer is paying on behalf of their employees. That increases in 2014 to 50 percent. So, there’s a benefit for a small business that perhaps hasn’t been providing coverage in the past to do so going forward because there are some tax benefits.
With the state not stepping in, could there be less competition and fewer choices for Kansans looking for insurance, as they’re only being offered the federally run option?
There is a potential. The feds will decide which plans will be accepted on the exchange. There’s a potential for fewer plans. There’s a potential still for more. We just won’t have control over that. I have a little bit of concern that it will be easier for (the federal government) to just deal with the large national companies and it could potentially limit choice in Kansas, but that doesn’t necessarily have to happen and, in fact, we may end up with more choices. That just remains to be seen. It’s just that we’re not going to have the ability to make that decision.
Can you think of any other issues coming out of this new healthcare environment that will affect young adults?
The biggest advantage for young folks is, number one they can stay on their parents’ policies if the parent has dependent coverage included in their policy. If not, I think the financial assistance that young people would receive is going to be significant, and the coverage is going to be more comprehensive. Some of our “mini-med policies,” we call them, they’re very limited benefit plans, that still require an awful lot of out-of-pocket expense. I think, overall, young people can benefit with the financial assistance that will be provided.
Who would be eligible for this assistance?
From 100 percent to 400 percent of the federal poverty level there will be some financial assistance available. So, someone at the federal poverty level today earns somewhere between $8,000-10,000. Up to 400 percent, if you look at a family of four, 400 percent is about $90,000. I think for an individual, it’s around $40,000. So, even making $30,000-$40,000 you’d still be eligible for some financial assistance to be able to buy good, comprehensive coverage.