How and when federally overseen multistate plans develop in California's health insurance exchange is still anybody's guess, but no matter what shape they take and when they arrive, they won't serve as a surrogate public option, according to a California exchange official.
"This is not a public option," said Andrea Rosen, interim health plan management director for Covered California. "These are private carriers contracting with the federal government. In a true public option, the government would be the insurer. That's not the case here," Rosen said.
The Affordable Care Act calls for the federal government to offer two multistate health insurance plans through state exchanges. To be eligible, insurers must be licensed in all 50 states. At least one of the insurers must be not-for-profit, according to the ACA.
The U.S. Office of Personnel Management, which oversees health coverage for federal employees, will contract with private insurers that will offer coverage to all individuals and small businesses, not just those employed by or contracting with the federal government.
The ACA timetable requires multistate plans to be available in at least 30 states in 2013, with annual increases until 2017, when multistate plans should be available in every state.
The Obama administration predicted as many as 750,000 people could be covered by a multistate plan in the first year.
Where California falls in that timetable has yet to be determined.
Multistate Plans Aimed at Spurring Competition
In an earlier form, the health reform law called for the federal government to serve as an insurer -- similar to its function in Medicaid and Medicare -- for any and all consumers, operating alongside private plans. The government would negotiate costs for consumers and reimbursement for health care providers. The idea of a public option died in Congress.
Some pundits consider federal oversight of multistate plans as a "de facto" public option, substituting for the controversial plan included in early drafts of the ACA.
"It would be better to forget comparisons to long-dead public options," Rosen said. "This really isn't that and trying to fit it into that description doesn't serve a purpose."
Supporters say multistate plans will encourage competition -- one of the main arguments for including the original public option and eventually multistate plans in the ACA.
"Multistate plans will stimulate competition in states dominated by one or two carriers," Rosen said. "This is not the case in California where we already have real competition. MSPs will be much more beneficial in the 'monopoly' states where consumers suffer due to lack of health insurer competition," Rosen said.
Details To Be Determined
Many details concerning multistate plans have yet to be determined, including:
- Which states will offer them next year, and which will in subsequent years;
- Which private insurance companies will participate; and
- How or whether multistate plans comply or deviate from state regulations -- including essential benefit packages, state fees and taxes and consumer protections.
Federal oversight of multistate plans raises the possibility that federal rules and regulations may trump state regulations in some situations. In section 1334 of the ACA, 13 specific requirements are listed for multistate plans.
In a letter to the Office of Personnel Management, the National Association of Insurance Commissioners wrote, "It is absolutely essential that multistate plans compete on a level playing field with other qualified health plans, which are subject to state insurance law."
Rosen, who noted "there's a lot of devil in those details," would not predict how the issue might play out in California.
"I won't go so far as to say they won't have special treatment. We don't know that. Is OPM going to adopt its own requirements for their providers? We don't know yet."
One of the devilish details is a provision in the ACA requiring at least one multistate to not cover abortion services.
"That's going to be a problem," Rosen said.
The Obama administration has said rules for multistate plans will be issued soon.
The Government Employees Health Association is a likely candidate to operate one of the plans, according to insurance experts. The not-for-profit organization currently providing coverage for more than 900,000 federal employees, dependents and retirees, recently acquired a company with licenses in all 50 states.
Multistate plans may steer clear of California at the beginning, according to some experts.
"They'll get here," Rosen said, "but we don't know when. Some people speculate -- and I think correctly -- that unless you already have a very robust presence in California, you may not choose California as a place to start. This is a very large, complex market."