Health benefits exchange advances

But N.C. is fighting it, too

Staff WriterMay 18, 2011 

  • As proposed in the House, the N.C. Health Benefits Exchange Authority Board would have 12 members, eight appointed by the General Assembly and four by the governor, representing specific interests. The insurance commissioner and the Medicaid director would serve as nonvoting members, but in case of a tie the Medicaid director could cast a vote.

    An executive director would run the operation at a salary of up to $185,000 a year. Some House members have questioned why that position should be paid so much, but the bill's sponsors say the state won't be able to hire someone who is qualified at a lower salary.

    None of the directors would be paid.

    The board's makeup would include four Senate appointees representing:

    A medical provider, as recommended by the N.C. Medical Society

    An insurer, recommended by the N.C. Association of Health Plans

    A business representative (not an insurer or hospital), recommended by the N.C. Chamber of Commerce

    An insurance agent, recommended by the N.C. Association of Health Underwriters, the National Association of Insurance and Financial Advisors, and the Independent Insurance Agents of N.C.

    Four House appointees:

    A nursing provider, recommended by N.C. Hospital Association

    An insurance industry representative (not an insurance agent)

    A small-business representative, recommended by National Federation of Independent Business

    A member of the general public (with no connection to insurers, hospitals or providers)

    Four governor appointees:

    An expert in information technology systems

    An expert in rural health or rural health economics, recommended by the N.C. Rural Economic Development Center

    A member of the general public (no connection to insurers, hospitals or providers)

    An expert in health economics, health care finance, actuarial science or risk management.

— On the one hand, state lawmakers are setting up a new health benefits marketplace for hundreds of thousands of North Carolinians who have trouble getting insurance. On the other, they're suing to avoid having to do it.

The marketplace, which would provide a choice of insurance policies to small businesses and individuals, is required by last year's federal Patient Protection and Affordable Care Act. If states don't set up their own exchanges, then the federal government will do it for them.

That's what has prompted a group of Republican House members to write a bill creating a Health Benefits Exchange Authority and shepherd it through the General Assembly. The bill had been moving briskly through committees, but it has stalled on the House floor in the face of a campaign against it by the N.C. Justice Center, representing consumers. Also, an analysis published by the limited-government advocacy group Civitas Institute on Tuesday says the bill wouldn't establish a truly market-based system.

Twenty-six states have sued to invalidate the federal health law - often derisively called Obamacare - and last week North Carolina's GOP leadership in the General Assembly joined the crusade by filing a friend of the court brief in one of the cases.

Since the future of the federal law is uncertain, it's possible that North Carolina will take a wait-and-see approach before it takes any steps to establish a marketplace. Even with the House's approval, the Senate could sit on the bill until next year to see what develops on the legal front, Senate leader Phil Berger said.

But that would only give the General Assembly six weeks during next year's short session to enact the bill and apply for a federal grant to continue setting up the exchange. The deadline is June 30, 2012. A grant in September allowed the state to begin initial planning.

Beginning in 2014, the money that has gone into the N.C. Health Insurance Risk Pool would be diverted to the new exchange. It is required to be self-sustaining by 2015. But it's unclear how much it will ultimately cost. It could be funded through taxes on premiums and fees on insurance carriers and health care providers. It is estimated that 578,000 people would buy insurance through the exchange, and that number would increase to 731,000 by 2016.

The argument against

The uncertainty over financing is the basis of the friend of the court brief filed last week. House majority leader Rep. Paul Stam, a Republican from Apex, said GOP leaders turned to a national law firm with a prominent local practice: Nelson, Mullins, Riley and Scarborough.

They came up with variations on the argument that the federal mandate is too vague to be enforceable.

"The question is how much does it cost," Stam said at a news conference last week. "What this brief demonstrates is it's an unknowable question. You can't even get close to knowing it."

The brief joins the General Assembly leadership with legislators from the state of Minnesota in support of Florida's lawsuit. It is currently in the U.S. Court of Appeals for the 11th Circuit in Atlanta.

Aside from the unknown costs, North Carolina consumer advocates and some Democratic legislators worry that House Bill 115 would give the insurance industry too great a voice in the state board that will oversee it. The bill sets aside two seats for insurers.

The bill has been rescheduled twice for a House vote, and is now on the calendar for Wednesday. The bill's main sponsor, Rep. Jerry Dockham, a Republican from Davidson County who is a former insurance agent, said Tuesday that some members of the Republican caucus had questions that he wanted to resolve before bringing it to the full House. Dockham said they weren't major issues.

But Adam Searing of the N.C. Justice Center said he hopes his group's opposition campaign has helped slow the legislation. The Justice Center doesn't want the insurance industry on the board at all.

Searing also objects to the lack of the right to appeal except for insurers, and the bill's provision allowing the exchange to sell advertising to insurers, which he says would compromise its objectivity.

Searing called the bill "one of the worst in the country," and said the Justice Center's campaign has triggered a lot of outcry. "It should be a cautionary note to Republicans and Democrats messing around with" health insurance. or 919-829-4576

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