DC took a big step this week toward improving the affordability and quality of health insurance plans sold in the District. On Wednesday night, the board tasked with implementing federal health reform voted to make the city’s health insurance exchange the sole marketplace for all individual and small business insurance plans.
What does this mean? Starting in 2014, any insurer who wants to operate in the District must do so through the exchange. Among other things, this will guarantee that individuals and small businesses can fully participate in subsidies that improve the affordability of insurance. Most low-and-moderate income individuals will be able to receive tax credits and upfront payments for premiums and out-of-pocket costs. Some small businesses will access tax credits that offset up to 50 percent of their employees’ premium costs.
The exchange design also allows for regulators to make sure that health care plans meet minimum quality standards. For example, insurers on the exchange will have to offer plans that meet higher levels of need and provide an adequate number of physicians in a given area. The specific standards will be decided at a later date, but to improve plan quality, DC must consider higher standards than the minimum guidelines set by the federal government.
The health exchange board also approved a measure to standardize costs within the exchange. Currently, the premium people pay varies depending on whether they purchased the insurance directly or received a plan through an employer. In general, those receiving an employer-provided plan pay less. Starting in 2014, the exchange will combine individuals and small businesses for purposes of premium calculation ‘ meaning everyone should pay the same prices for plans similar in quality.
Overall, Wednesday night’s vote was a step in the right direction for DC’s health insurance market. But this was only the first step in a long process that will continue through the fall. Now that a foundation is laid for the market design, board members and staff must produce detailed plans about the administration, management, and financing of the exchange. They must also consider higher quality standards for insurance plans offered. Without higher standards, DC risks an opportunity to build a health insurance market that truly meets the needs of all residents.
DCFPI applauds the board’s efforts, and we hope they approach future decisions with the same dedication shown over the past few months.