Rochester Business Journal

With the U.S. Supreme Court's decision that the Patient Protection and Affordable Care Act is constitutional, Assembly Insurance Committee chairman Joseph Morelle, D-Irondequoit, wants to see the state Legislature revisit an insurance exchange law.
 
New York already is moving ahead with plans to set up an exchange under an executive order from Gov. Andrew Cuomo.
 
"My strong preference would be to have one created by the Legislature," Morelle said. With the force of law behind it, an exchange would "carry more weight."
 
Any new proposal that Morelle might make would appear for now to have little chance of succeeding.
 
The Supreme Court ruling last week that upheld most of the Affordable Care Act has neither ended the largely partisan split over health care reform nor ensured its survival.
 
The apparent GOP presidential nominee, Mitt Romney, has vowed to try to repeal the statute if elected. House Republicans have scheduled a vote on a repeal measure, but Senate Democrats probably would kill such legislation in their chamber.
 
The partisan split on the law would seem to make it unlikely that the Republican-controlled state Senate would cooperate on a new insurance exchange between now and the November presidential election, said a spokesman for Senate Majority Leader Dean Skelos, R-Long Island.
 
"The Senate has no plans at this time to revisit (an insurance exchange) bill," Skelos aide Scott Reif said.
 
New York's Republican Senate majority remains dubious about the Affordable Care Act and the insurance exchange, Reif said. Most, if not all, Republican state senators would see little justification for reconsidering an insurance exchange law.
 
Under the Legislature's rules, Skelos could single-handedly keep such legislation from being considered by the Senate if it were proposed.
 
Insurance exchanges, sometimes called health insurance "supermarkets," are a key provision of the new federal health care law. They are supposed to provide one-stop shopping for low- and moderate-income individual purchasers to obtain health coverage, choosing among affordable plans offered by several carriers.
 
Insurance exchanges are not a new idea. The California Public Employees Retirement System and the Federal Employees Health Benefits Program are essentially insurance exchanges, noted Timothy Jost, a professor at the Washington and Lee University School of Law, in a 2009 paper. And Medicare Advantage plans such as MVP Health Care's MVP Gold and Medicare's Part D prescription drug coverage have elements of insurance exchanges.
 
By creating broad risk pools, insurance exchanges are supposed to lower costs. But exchanges created in the past by states, including Texas and Florida, failed to do so and eventually shut down. That was partly because insurers outside of the exchanges, in a practice known as cherry picking, agreed to accept only the healthiest and lowest-risk enrollees, leaving the exchanges with the least healthy, highest-risk and most expensive members, Jost said.
 
Proponents of the Affordable Care Act maintain that by requiring all insurers to cover pre-existing conditions and refrain from restrictions such as lifetime coverage caps and by requiring all U.S. citizens to have health coverage, the act will make it nearly impossible for carriers to cherry-pick. Jost's 2009 paper counted an insurance exchange set up as part of Massachusetts' health care reform-a plan some see as a model for the federal initiative-as one of the few that have been relatively successful.
 
The Affordable Care Act calls for states to have insurance exchanges operating by 2014. The law gives states two basic options for establishing exchanges: set up your own or have the federal government do it for you.
 
Acting on a bill proposed by Gov. Cuomo, the Assembly quickly passed legislation in June 2011 calling for establishment of a New York insurance exchange. A separate bill introduced in the Senate a week earlier stalled, however, as the Senate's Republican majority backed away from it.
 
Facing unabated Senate opposition, Cuomo did an end run around the Senate, signing an executive order in April to begin creating an exchange.
 
The statewide insurance exchange would significantly lower costs for individuals, small businesses and local governments, Cuomo said. Subsidies available under the new federal law would reduce the premiums of people without group insurance by two-thirds and would provide coverage for 1 million uninsured New Yorkers, the governor said in April.
 
The governor's action won praise from David Klein, CEO of Excellus BlueCross BlueShield. He applauded Cuomo's leadership for establishing regional councils of interested parties-including insurance carriers, consumer and small-business representatives and medical providers-to guide officials in setting up the exchange.
 
Many in the state Senate majority see the generous subsidies cited by Cuomo as a cause for concern, however.
 
Senate Republicans chose not to act on a health exchange bill last year partly because they wanted to see whether the Supreme Court would overturn the Affordable Care Act, which would have made the health care exchange question moot, Reif said.
 
But even after the Supreme Court ruling, he added, many in the Senate's GOP caucus fear that subsidies to insurance exchange enrollees would raise New Yorkers' federal taxes, so they remain leery of the exchange on that score.
 
Throughout the health care reform debate, Senate Republicans had questions about the possibility that the federal law would raise New Yorkers' federal taxes, not just because of the subsidies but for other reasons as well, Reif said. As the act's implementation proceeds, they have become more convinced that it will.

7/6/12 (c) 2012 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.