Consumer Advocate Raises Concerns About Exchange Regs, HHS Predicts More States Will Set Up Marketplaces

While the administration’s interim regulations governing the operation of state-based exchanges in the Affordable Care Act received generally positive reviews for their “flexibility,” some consumer advocates argued that the federal government could be doing more to protect consumers. At today’s “Health Insurance Exchange Development” event sponsored by the Bipartisan Policy Center, Stephen Finan, Senior Director of Policy for the American Cancer Society Cancer Action Network, laid out his concerns of where HHS has fallen short:

1) No minimum standards for the governance of the exchange, marketing rules, and network adequacy.

2) The partnership between the states and the federal government could allow states to opt out of establishing critical regulations and leave the federal government in charge of governing essential elements of the new market place.

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Indeed, consumer advocates have expressed some disappointment that the rule establishes governing standards that only stipulate that a majority of voting governing board members not have a financial conflict of interest. “Even in a voting minority, insurer representatives may dominate a board. It is also hard to imagine conflict of interest standards that have integrity that would not keep them from voting, even from being present for the discussion of, most of the important issues that exchanges will deal with,” Timothy Jost has pointed out.

Meanwhile, Steve Larsen, Director of the CMS Center for Consumer Information and Insurance Oversight, remained optimistic that the proposed regulations would inspire more states to establish their own exchanges, thus keeping the federal government out of the business of running them. The Affordable Care Act requires the federal government to intervene if the state fails to build an operable exchange.

“I think we anticipate with the release of the most recent regulation that lays out this hybrid partnership model that the level of activity will increase significantly this summer,” Larsen said. “And then in terms of the appetite some states have in moving forward….I have never met a governor that didn’t want to control their own destiny in their state. And I think that as states look more closely at the regulations that we put out and then the next phase that will come, I think you’ll see a lot more activity to build on what’s already going on.”

So far, “virtually every state has made at least some progress toward setting up [the] health insurance marketplaces,” including states like Indiana, Mississippi, and Alabama — which are also challenging the the constitutionality of the health law. In total, 16 states have “passed exchange-related legislation,” 39 states have introduced exchange legislation this year, and “48 states (all except Louisiana and Florida) plus the District of Columbia are engaged in some level of exchange planning.” Only Louisiana has publicly announced that it won’t set up an exchange.”