House, Senate View Health Exchanges Differently

Getting a final health overhaul bill to President Obama's desk by the end of the month or early February remains the goal of lawmakers who are returning to Washington this week. But the task remains a tricky one. Even some of the things the House and Senate appear to agree on hide some key disputes.

One example is the so-called "health care exchanges," the marketplaces where individuals and small businesses would be able to shop for health insurance in an overhauled system. Both the House and Senate call for the creation of such exchanges in the bills they passed in November and December, respectively. But the different versions would work in very different ways.

The basic idea is the same. In fact, it's the same as one of the best-known health insurance exchanges already up and running: Massachusetts' Commonwealth Connector.

"We're a little bit like Travelocity for health insurance," says Jon Kingsdale, executive director of the Commonwealth Health Insurance Connector Authority. "It's an electronic, automated store for insurance."

Because almost everyone in Massachusetts is required to have insurance as a result of a law passed in 2006, Kingsdale says, he and his staff have worked hard to make the process as simple as possible.

"Literally, you get on our Web site, you give us three pieces of information that are required for determining the premium: age, zip code and family size," he says. Then individuals get to choose the level of benefits.

"Do they want gold-level benefits — kind of a Cadillac plan — or do they want silver or bronze? And then we can array for them on the Web easy-to-compare options — typically three to five health plans that meet the specifications they've given us."

Kingsdale says it typically takes people 20 to 30 minutes to evaluate their options, decide which plan to purchase "and [they] push a button and they're enrolled."

Massachusetts' program is just one example of a health insurance exchange. Timothy Jost, a professor at Washington and Lee University School of Law, says there are other examples within the federal government.

"The federal employee health benefits program and, in fact, the Medicare Advantage and Medicare prescription drug program look a lot like exchanges as well," he says.

As envisioned in the health overhaul bills, the new health exchanges would provide even more tools for consumers than many existing health exchanges. For example, Jost says, "Under the Senate bill, one of the things that they would provide would be sort of little scenarios: So if you get breast cancer, these are the kinds of things we would cover, these are the kinds of things we wouldn't cover, this is the cost-sharing that you're going to face."

The exchanges will also be responsible for handling a lot of the new paperwork that will come with the new law — things like sorting out subsidies and tax credits for people and businesses eligible for government help.

And if the exchanges work correctly, they could do even more than just help consumers make better choices.

"The comparison shopping and the bidding dynamics that this insurance store would create would add some significant downward pressure on premiums," Kingsdale says. "Just like Wal-Mart: It's just a store, but it's done a pretty remarkable job in pushing prices down. With enough volume and enough expertise, I think exchanges can have a similar impact."

But while House and Senate lawmakers envision the exchanges performing similar functions, there are some key differences.

For example, not everyone will be able to use the exchanges. In both bills, at least at first, only individuals who don't have access to insurance at work and small businesses could buy coverage through the exchanges. But while the House bill might open up the exchanges to more people and larger firms later on, the Senate bill would not.

Another very big difference is that in the House bill, the exchange would be national, set up and run by the federal government. In the Senate bill, each state will have to set up its own exchange, complete with its own state law on the subject.

Liberals tend to support the House's national approach; moderates, the insurance industry and the state insurance commissioners prefer the Senate approach that gives each state responsibility for its own exchange.

Jost worries about the Senate's approach: "It seems to me to be a much more complicated process that has a lot more room for failure and, frankly, I think a lot less accountability," he says. "Because if the state fails to do it, then the federal government is supposed to step in, but I think it's going to be difficult for the federal government to step in — to say to a state, 'You failed; we're taking over.' "

Indeed, on Monday a group of Democratic House members from Texas wrote to President Obama urging that the House approach be preserved in the final bill. They worry that because leaders in their state oppose the health bill, they won't bother to create an exchange, leaving uninsured state residents with no way to benefit from the new law.

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