Point of View

Reshaping N.C.'s health coverage

February 16, 2011 

— North Carolina lawmakers will soon write the rules for a new marketplace where more than a million individuals and small businesses in our state will purchase insurance policies.

In 2014, insurance companies will no longer be allowed to deny coverage or increase premiums based on pre-existing medical conditions. Individuals and small businesses will band together to get more affordable rates for insurance plans. And substantial tax credits will help offset premium costs.

These new protections will be implemented and monitored by a new independent organization in North Carolina called a health benefits exchange. This exchange will help people enroll in coverage. It will serve as a consumer watchdog to ensure insurance company compliance with federal regulations. And it will handle millions of dollars in tax credits that will go to families and small businesses struggling to afford insurance.

The exchange will require insurance companies to compete on cost and quality instead of racing to cover the young and healthy while denying coverage to the sick.

National health reform leaves each state with a choice. Our state can either establish a health benefits exchange or allow the federal government to set up an exchange on our behalf. North Carolina has a long history of innovative thinking in health care. With local control, the state can also do more than federal law mandates to make the insurance market friendly for consumers. For these reasons we think it makes sense for North Carolina to establish its own exchange.

The debate over how to structure an exchange already is attracting the attention of every insurer and health care interest group in the state. Some of these groups want to weaken the exchange from the first. But if the state is going to undertake this important endeavor it is critical that we do it right.

There are a few key principles that should guide legislators as they build a state-based exchange. The exchange must have the power to decide which insurance plans are sold in this new market. It must be able to insist that products sold on the exchange provide value. The exchange should be able to create some product standardization to present families and small businesses with easily comparable options. And insurance companies should not serve as members of any board governing the exchange.

Some insurance companies will inevitably argue that they should help run the health benefits exchange. They will argue that their expertise is needed to establish this new market, just as they are involved in North Carolina's high-risk health plan. But insurance companies can easily serve on an official advisory committee to the exchange board without voting.

Unlike the high-risk pool, which is an insurance product, the exchange is a market that will help regulate insurance companies. It will also oversee millions of dollars in subsidies that flow from the federal government to the insurers. These are serious inherent conflicts that should preclude insurance companies from serving on the exchange board.

Building a consumer-friendly health benefits exchange is critical no matter your opinion of national reform. Allowing families and small businesses to pool their purchasing power has always enjoyed bipartisan support. And people of every political persuasion think that insurance companies should not deny coverage based on medical history. That is why the debate over how to structure an exchange is crucial.

Instead of putting insurance companies in charge of choosing customers, customers will soon be in charge of choosing an insurance company. The exchange is the entity that will make this goal a reality.

Monied interests will try to shape this new marketplace to serve their own purposes. But North Carolina is a visionary state that stands up for its people. That is why we are confident that in the coming months leaders will put the interests of consumers first when debating how best to assemble an exchange.

Adam Searing and Adam Linker are with the N.C. Justice Center's Health Access Coalition.

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