NAIC approves "Model Act" for State Insurance Exchanges
On Friday, December 17, 2010, the National Association of Insurance Commissioners (NAIC) approved a model law for state insurance exchanges. Each state is required under Patient Protection and Affordable Care Act (PPACA) to establish an “American Health Benefit Exchange” by January 1, 2014.
The NAIC’s American Health Benefit Exchange Model Act provides a basic statutory framework designed to comply with PPACA’s mandates. PPACA has two basic categories of requirements for these state exchanges: (1) minimum functions that the exchanges must undertake, and (2) oversight responsibilities that exchanges must exercise in certifying and monitoring the performance of “quality health plans” (QHPs).
The exchanges are supposed to help individuals obtain QHPs and help small group employers to obtain coverage for employees. According to the Model Act, the “intent of the Exchange is to reduce the number of uninsured, provide a transparent marketplace and consumer education and assist individuals with access to programs, premium assistance tax credits and cost-sharing reductions.”
It is widely understood that states will need plenty of lead time to properly plan and implement exchanges. Further, PPACA provides that the Secretary can set up and operate an exchange in any state if “the Secretary determines on or before January 1, 2013” that a state will not be able to meet the 2014 deadline. The U.S. Department of Health and Human Services (HHS) published its first guidance on state insurance exchanges on November 18, 2010. The first Notice of Proposed Rulemaking for federal regulation governing the state exchanges will be published in early 2011.
Even states that have joined in court challenges to PPACA have indicated they are moving forward to plan for the insurance exchanges. In September 2010, forty-eight states and the District of Columbia were awarded their first grants from the federal government under PPACA to be used for planning the implementation of exchanges. Additional grants to states are available in 2011, but states will have to meet certain milestones in order to be awarded more grants.
