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Testifying before NAIC on state-based health insurance exchanges

At the Summer NAIC Conference held in Portland, Oregon, I appreciated the opportunity to take part in a panel discussing the case for states to establish their own health insurance exchanges. It was great to engage with several commissioners and their staff members on this important topic. By moving to a state-based health insurance exchange, not only can states save money for their residents, but they can enjoy significantly more flexibility to oversee their markets and craft unique solutions to meet their state’s needs.

Below is my written testimony delivered before the Managed Care (B) Committee:

Mr. Chairman and Members of the Committee:

Thank you for the opportunity to talk with you today, it’s great to be here and to see so many    friends and familiar faces.

For those of you who don’t know me, my name is Randy Pate, and in addition to launching my own consulting company last year, I also serve as president of StatesWork, a non-profit educational organization supporting state healthcare leaders from across the political spectrum, who value the role of states in overseeing and implementing innovative solutions. Our mission is to work with leaders on both sides of the aisle to support states’ rights and leadership in the healthcare arena.

As some of you may remember, I formerly served as the Director of the CMS Center for Consumer Information and Insurance Oversight (CCIIO) during the Trump Administration, where I am proud to say we were successful in stabilizing the individual health insurance market, including overseeing three straight years of lower premiums, and seeing the return of competition between private health insurers around the country—leading to better affordability and more choice for consumers. In fact, the percentage of counties with just one insurer offering coverage dropped from 52% in 2018 to only 9% in 2021.

While the previous panelists have done a great job in explaining how moving to a state-based health insurance exchange can reduce costs, increase state autonomy and oversight, and promote state flexibility, I want to very quickly drill down on three points as you consider making this important and needed move.

First, I want to dispel the notion that moving to a state-based exchange (SBE) is risky or inherently disruptive to the market. While establishing a state-based exchange should be undertaken carefully and thoughtfully, today the technology is better, more stable, and more reliable than it ever has been. Thankfully, we are no longer living in the early, turbulent early days of the exchanges in which glitches and outages that confused consumers, destabilized state markets, and suppressed many from enrolling in coverage.

In fact, among the states that made the move to a state-based exchange over the last 2 years—Pennsylvania, New Jersey, Kentucky, Maine, and New Mexico, 4 out of 5 actually saw enrollment increase in the year after moving to an SBE.

There are several reasons for this success. In addition to improved technology, the CCIIO team has dedicated significant resources and personnel to assist states as they transition, ensuring a smooth handoff of consumer data and helping to inform consumers and reduce confusion.

With the help of their federal partners, your states can do this, do it well, and maintain or increase enrollment in the process.

Second, as we’ve heard previously at this conference, states are using 1332 State Innovation Waivers to build on existing reinsurance programs or go entirely beyond reinsurance to institute significant market reforms. While it’s true that “states are the laboratories of democracy,” they are much more than that. Under our Constitution and federal system, states are charged with overseeing the health, safety, and welfare of state residents. Your markets are different, your citizens have unique needs, and you know your markets best. This concept is built in to the text of the ACA itself, which not only gives states the authority to establish and run their own exchanges, but provides flexibilities like Section 1332 State Innovation Waivers to adapt many of the law’s key provisions to different state situations and preferences.

That’s one reason why during my time at CMS we issued a series of waiver concepts, which included various ideas for innovative, market-based waivers at the state level. One example is account-based subsidies, an approach in which a portion of a consumer’s premium or cost-sharing reduction subsidy to can be directed into an account owned and controlled by the consumer, which can then be used to purchase coverage and pay for out-of-pocket costs, and can also be used to build financial and health security over time.

There are certainly many more innovative ideas that states can and should explore for their markets. But as we pointed out back then, the federal platform is only so flexible, and cannot readily support many of the more innovative waiver approaches states might want to take. By establishing a state-based exchange, it will enable greater flexibility to innovate and tailor solutions for your state.

Finally, I’d like to raise another issue for state leaders to consider as you contemplate establishing a state-based exchange.

In 2018, CMS launched Enhanced Direct Enrollment (EDE), a pathway enabling Qualified Health Plan issuers, web-brokers, and technology providers to create their own online engagement and enrollment platforms for consumers. Through EDE, licensed health insurance agents and brokers can use approved EDE platforms to assist with eligibility determinations, plan selections and enrollment, as well as assist consumers with activities including updating coverage due to qualifying life events, receiving notifications about their coverage, and even downloading tax documents.

EDE and other private sector pathways like Direct Enrollment have become tremendously important in enrolling consumers, to the point that today well over half of plan selections on the federal platform are made with the assistance of an agent or broker. In addition, web brokers have shown a greater ability to reach and enroll new consumers—which are crucial to lowering uninsured rates and sustaining a viable market.

At this point, for many consumers living in states on the federal platform, a web broker or EDE partner may be the only way they have ever shopped for individual market coverage. As states continue to move toward state-based exchanges, they should build EDE into the platform from the very beginning—whether during the planning process in their legislation enabling the creation of the exchange, in their RFP’s, or in the implementation itself, ensuring that this successful pathway remains available as a viable option for consumers in every state. Not only will this ensure that consumers don’t lose an option they like for shopping for their coverage, but it can also take a significant chunk of the operational load off of the exchange and call center.

Thank you again for the opportunity to speak, and I look forward to answering any questions.

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