The Obama Administration is preparing for the federal government’s impending role as the primary sponsor of two new multistate health insurance plans that will be available for individuals and small businesses to purchase under Obamacare’s statewide insurance exchanges in 2014.
Although they are not exactly the same, the nationwide plans do somewhat resemble the government-run “public option” that some congressional Democrats advocated during the Obamacare debate. As the New York Times reports, the plans represent an opportunity for the federal government to contract with large-scale providers and inject marketplace competition into Obamacare’s insurance exchanges:
The national plans will compete directly with other private insurers and may have some significant advantages, including a federal seal of approval. Premiums and benefits for the multistate insurance plans will be negotiated by the United States Office of Personnel Management, the agency that arranges health benefits for federal employees. [...]
The federal standards will pre-empt state rules in at least one respect: the national health plans will automatically be eligible to compete against other private insurers in the new exchanges, regardless of whether they have been certified as meeting the standards of those exchanges.
The administration has promised to “work cooperatively with states.” But it is unclear whether the government-sponsored plans will have to comply with all state laws and consumer protection standards; whether they will have to comply with state benefit mandates; and whether they will have to pay state fees and taxes levied on other insurers to finance exchange operations. [...]
“Multistate plans have real potential benefits for consumers,” said Ronald F. Pollack, the executive director of Families USA, a liberal-leaning consumer group. “But there is also potential trouble if the multistate plans are exempted from some consumer protection standards.”
State health commissions, private insurers, and consumer protection advocates alike want to see the nationwide plans compete on a level playing field so that benefits standards and competitive pressures are both fair and consistent throughout state exchanges. If implemented properly, however, the new multistate health plans could drive down health costs while offering consumers coverage approved directly by the federal government.