Legislature passes rules for insurance exchange

OLYMPIA — The Washington state Legislature has passed a bill setting rules for insurers preparing for the state’s online insurance exchange.

State insurance exchanges are a key piece of the federal health care overhaul signed into law by President Obama in 2010. The state exchanges for individual and small-group plans are set go live January 1, 2014.

Insurance exchanges will work as online marketplaces, such as those widely used for airplane tickets and hotels, where consumers can compare different plans’ coverage options and prices.

Under the bill passed Saturday, carriers in Washington will be able to sell plans outside of the exchange, but, as is the case in the exchange, they won’t be allowed to offer cheaper “bronze” plans without also selling “silver” and “gold” plans. In this way, they won’t be able to opt out of the exchange to cover only the young and the healthy.

“Our concern was that the insurance companies not game the system and operate outside the exchange,” said Stephanie Marquis, spokeswoman for the state’s Insurance Commissioner’s Office. “We got a really good bill passed.”

The insurance industry is divided over the bill, with some companies, including Group Health, saying it creates a level playing field while others, including Premera Blue Cross and Regence BlueShield, complain that it stifles the free market.

“They all want it to work, but they just have different ideas about what works best,” said Sydney Zvara, executive director of the Association of Washington Health Care Plans. Her organization has taken a neutral position on the bill.

Catastrophic plans, available to younger people of limited means, would be available only inside the exchange.

The bill also stipulates that the state will use its largest small group insurance plan — currently the Regence BlueShield Innova plan — as its benchmark plan for determining its essential benefits.

Benefits that all plans will under federal law have to cover include emergency care, hospitalization, prescription drugs, mental health care and maternity care. Initially, the Obama administration was expected to provide states with a definitive list of essential benefits. Instead, it has left this task to the states until at least 2016.

The bill was opposed in the Legislature by most Republicans, who say it is unnecessary for the state to go further in setting rules for the exchange beyond what the federal government has done, particularly as many specifics of health care reform remain unresolved.

Without a state-run exchange, the federal government would either step in to run the state exchange on its own or select a nonprofit entity to do so.

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