State lawmakers eye risks of health exchange
CHARLESTON, W.Va. -- West Virginia insurance officials told lawmakers Tuesday that partnering with the federal government is the state's best option for a new health coverage marketplace, but also cautioned that success is far from certain.
Just nine lawmakers took part in the two-hour interim study meeting to field questions about the planned health insurance exchange. Those legislators raised concerns about its potential costs and whether it would reach enough of the 250,000 state residents without coverage.
With states facing a Friday reporting deadline, Insurance Commissioner Michael Riley said West Virginia tentatively plans to pursue a partnership to run the exchange called for by the federal health care overhaul. Of the other options, Riley said an exchange run solely by the state would prove too costly, while leaving it entirely to federal officials would give the state little say regarding policy and regulations.
An exchange proposes to help individuals and small businesses buy insurance from the private market by combining their purchasing power. The federal law would also help many consumers pay premiums.
Tomblin administration officials estimate that between 37,000 and 60,000 people would seek coverage through this new marketplace. Jeremiah Samples, an Insurance Commission official who has overseen the agency's exchange planning, said West Virginia modeled its outreach estimates on research by neighboring Maryland.
Sen. Dan Foster, D-Kanawha and a physician, questioned whether the estimate range was too low. Both Foster and Delegate Don Perdue, chair of the House health committee, noted that the chances of the state sustaining an exchange increased with the level of participation.
Samples cited how just 17,000 West Virginians now get their health coverage through individual policies, while around 75,000 are insured through small employers.
"We have a relatively small population when compared to other states," Samples said. "You just don't have a large pool of individuals from which to spread the cost."
Delegate Ricky Moye, a Raleigh County Democrat, was among several legislators who asked about those costs. Samples said recently announced federal rules allow for an exchange to charge participating insurance companies up to 3.5 percent of the premiums from policies sold within this marketplace. Insurers are expected to pass along those costs to policyholders, Samples said.
Several lawmakers also questioned whether other provisions of the federal overhaul may hurt the exchanges.
One such provision bars insurers from charging older consumers more than three times the premiums paid by younger policyholders. Senate Minority Leader Mike Hall said that might discourage younger consumers from taking part in an exchange. Without younger, healthier people in the marketplace's pool, older consumers with multiple and often-expensive health issues would drive up costs, the Putnam County Republican noted.
"Young people right now, a lot of them think they're bulletproof anyway, and they don't buy insurance," Hall said. "Obviously it's a problem that may be a very big problem."
Samples said insurance officials in West Virginia and other states are mindful of this possibility, known as adverse selection. He said other components of both the exchange provisions and the overall health care law are meant to give these marketplaces a fighting chance.
"The premium stabilization efforts are fairly monumental. Their importance can't be understated," Samples said. "[But] given that there's never really been anything attempted exactly like this on this scale, there is a great risk."