Who Will Get Locked Out of the Health Exchange?

Another question from emails I’ve received:  Everyone knows the mantra of those proposing these health care reform bills is, “If you have insurance and you like it, you can keep it.”  But there’s a flip-side question – what happens if you don’t like the insurance you have through an employer?  Can you ditch it for the friendly ground of the National Health Exchange (House version) or the Health Gateways at the state level (Senate Health, Education, Labor and Pensions Committee version) and maybe even get yourself a piece of that ultra-competitive public plan everyone keeps talking about?  Unfortunately, the answer is “it depends.” Depending on what makes it into the final bill, many of us could get locked out.

Remember that part of the reason the Senate HELP bill came in at the bargain rate of $611 billion over 10 years is because the Congressional Budget Office estimated only around 20-30 million people would use the Gateways.  That's not a lot of people!  Take a look at the HELP bill and follow along.  It defines employer eligibility for the Gateways on pg. 111 – these are the standards for small businesses who would want to provide benefits for their employers through the Gateways, paying a percentage of the premiums and allowing the employees to each choose their own plan, public or private.  However, the number of businesses who could do so is very limited.  After saying the Secretary of HHS will make a determination as to the maximum number of employees the business can have, the bill specifies that the default number will be 10, unless the Secretary says otherwise.  That means only tiny microbusinesses will get to escape the rough and tumble small business private insurance markets (although some of the new regulation on those markets will blunt the more capricious business practices that small business owners currently endure.)

Individuals without coverage get to participate in the Gateway, but not anyone who has coverage through Medicare, Medicaid or something like the VA.  Also, those who are currently “eligible for coverage under… employer-sponsored coverage” (pg. 115) are likewise excluded unless the Secretary of HHS makes a determination that their employer-coverage is either not comprehensive or not affordable.  If it’s merely “sucky,” sorry, you’re stuck with it.

The House bill is a different story.  The National Health Exchange it establishes would have increasing eligibility that phases in over three years (pg 46).  In Year 1, it’s individuals who don’t have coverage, and microbusinesses (10 employees or fewer).  In Year 2, it’s individuals and small businesses under 20 employees.  But by Year 3, it’s individuals and any other employer (although if we’re talking Microsoft, the Commissioner of the Exchange may have the hugest businesses phase in over time).

Which individuals are also different story in the House bill.  If an individual “does not have coverage,” they’re in.  That’s a different consideration than merely being “eligible” for coverage – you could be eligible under a new job, but reject that new plan and wait until the Health Exchange is available, with its subsidies and public plan as an option.  Moreover, the House has a clause on “continued eligibility” (pg. 51) – if I’m working as a temp without benefits when the Exchange is set up, and I sign myself up for a good, affordable plan, but then get a permanent job month later at which I’d be eligible for benefits, I’m not forced out of the Exchange automatically.   I can keep the plan I’m comfortable with.  There’s no such provision in the Senate bill.

All of this is prologue to answering the real question – once the public health insurance option is up and running, can I drop my employer-based coverage, sign up for the Exchange and lock myself into my own little piece of Medicare-like coverage?  In the Senate bill, the answer looks to be no – I’d still be “eligible” for my employer’s plan, and so ineligible for the Gateway.  This is what Ezra Klein calls “a so-called ‘firewall’”, keeping out large businesses and individuals who could have coverage through their employer.  If the House bill is what we get, I have more options.  After all, the contract we sign with our employers and their insurer usually has different options for opting out.  Some allow for “open enrollment” periods once or twice a year, most allow for “qualifying events” like marriage or divorce to add or remove dependents.  A few are even more open-ended.  And in many you could sign up for other benefits (401(k), life insurance, etc.) but pass on health coverage.

The success of these Exchanges and the public health insurance option (which would only be offered within these Exchanges) depends largely on how many people can participate.  How much choice we’d really have in the new health care system depends on whether the House or the Senate prevail in the fight to come.

(Photo credit:  dagbo on Flickr.)