The next big step in the overhaul of the nation's health care system is under way.
As of Monday, health insurance companies across Wisconsin can submit plans that will be made available on the the state's health care exchange, a virtual marketplace where consumers can shop among numerous providers for an insurance plan.
Companies can submit plans through the end of the month to the state Insurance Commissioner's Office. Open enrollment for consumers will begin Oct. 1 and coverage will begin Jan. 1.
According to the state, some 320,000 residents are expected to purchase health coverage on the exchange.
The creation of the exchange is a key component of President Barack Obama’s signature Affordable Care Act, which drastically overhauls health care across the country. The act requires people to carry health insurance or pay a penalty.
Gov. Scott Walker is philosophically opposed to the Affordable Care Act and, like governors in 25 other states, decided to let the federal government set up the state's exchange. But officials here still have a role in choosing what plans are offered to the public.
In essence, the federal government will create the website where customers will go to shop for insurance coverage. It will also outline guidelines that must be met by policies offered on the exchange.
All plans in the exchange must provide a baseline of coverage, including mandated items such as ambulance care, prescription drugs and laboratory work.
Plans on the exchange — classified as platinum, gold, silver or bronze — also must meet strict guidelines on what percentage of the claims will be covered by the provider.
For example, a platinum plan will cost more but the provider will cover 90 percent of the claim costs. A gold plan covers 80 percent, a silver plan 70 percent and a bronze plan 60 percent.
“The state isn’t deciding what types of plans are sold on the exchange. That is decided by the feds,” said J.P. Wieske, legislative liaison and spokesman for the Office of the Commissioner of Insurance. “But the state will decide whether the plans submitted meet all the requirements of the state.”
Wieske says it’s too soon to tell how many insurance companies will participate in the first round of the program.
“My guess is some companies will prairie dog it,” Wieske said. “They’ll come out of their hole, see who else is up, and make their decision on whether or not to join the exchange later on, just maybe not for the first year.”
UnitedHealthcare, the state’s largest for-profit insurance provider, fits in that category.
“There is a great deal to evaluate before pursuing the exchange in any market, and we are holding back on making specific decisions in many cases until greater clarity can be established,” said spokesman Kevin Shermach in a statement.
During an earnings call in January, UnitedHealthcare President and CEO Stephen Hemsley said he expects the company to participate in 10 to 25 state-based exchanges.
Health analyst Ipsita Smolinski, president of health care consulting firm Capitol Street, says she believes United is a bellwether of the insurance sector — cautious at the onset of the creation of the exchanges, according to an article on InsideHealthPolicy.com.
“If the program works out to be profitable, then you could see United, over time, in additional exchanges,” Smolinski said. “But it’s not all rainbows and puppy dogs at the start.”
Madison-area providers who say they are participating in the exchange say it’s no easy task.
Group Health Cooperative, a Madison-based nonprofit insurance provider, is in the process of creating plans for the exchange and intends to submit them for approval by the end of the month, says Allan Wearing, sales and marketing director.
He described the overall amount of paperwork needed to participate as “phenomenal.”
“The federal government has been a little late on releasing regulations,” Wearing said. “Thursday we got another version of a template we could use and theoretically we could have started submitting plans Monday.”
Group Health is focusing on creating plans that will be offered to companies with two to 50 employees, or what is considered the small group market.
“Right now, for the most part, employees in the small group market get one insurance option offered by their employer. Now they’ll have options,” said Wearing, in reference to the platinum, gold, silver and bronze-level plans that must be offered on the exchange. “To that extent, it is nice.”
Scott Shoemaker, a spokesman with Physicians Plus, says the for-profit provider also plans to participate in the exchange.
“We take a look at every and all business opportunities to greater serve the community,” Shoemaker said.
Like Wearing, he said the federal government is “literally rolling out rules and regulations daily.”
“It’s being built on the fly, to some degree, because it’s never been done before,” Shoemaker said. “We are figuring it out as we go and so are the feds.”
Kyle Humphrey, assistant vice president of marketing and individual business at Unity Health Insurance, declined to say if his company would be participating in the exchange, calling it a “confidential business decision.”
Ellen Foley, a spokeswoman with Wisconsin Physicians Service Insurance, says the company has not yet decided whether or not to participate in the exchange.
Dean Health Plan did not return a call seeking comment.
Consumers will not be able to see what plans are available or what the rates will be until enrollment starts in October.
Wieske, of the state insurance office, predicts rates will go up because providers must now offer coverage to everyone, even those with costlier pre-existing conditions.
He predicts younger, healthier members of the exchange will see higher rates to compensate for the cost to insurance exchange participants with more health problems.
“If everything works out perfectly and everyone signs up for health insurance, the rates will probably still go up but not as much,” Wieske says. “It’s just simple math.”
Robert Kraig, executive director of Citizen Action of Wisconsin, a nonprofit that supports universal health care and the creation of exchanges, says it is “reprehensible” for the Walker administration to say costs will go up because less healthy adults now must be covered.
“It’s a divide-and-conquer strategy,” Kraig says.
While some 320,000 individuals are expected to be eligible to purchase insurance on the exchange in Wisconsin, some 30 million people nationally are expected to be eligible to participate in the exchanges.
“I think the exchanges are going to create a lot of choice and a lot of competition,” Kraig says. “Despite all the hand-wringing, I think the insurance companies will be reporting profits in the future. They are companies. They’re not going to pass up business.”