To set up a health insurance exchange where residents can shop policies online by the January 2014 federal Affordable Care Act deadline, the territory may need to piggyback on a state exchange, according to a recent study commissioned by the governor’s health reform task force.
Under President Barack Obama’s Affordable Care Act, the territory has $24.9 million in federal assistance which it can use to subsidize insurance premiums on a local health insurance exchange.
A health insurance exchange would help uninsured people and small businesses purchase private health insurance plans by creating a one-stop online health insurance market, where Virgin Islanders could shop for different plans and access government subsidies to assist their purchases.
If an exchange is set up and if it offers competitive private insurance plans, many of the territory’s uninsured would become insured, giving them more access to health care and providing the territory’s hospitals and other providers with more paying customers and fewer nonpaying ones.
About 27.8 percent of Virgin Islanders – some 33,000 individuals – are uninsured, according to Taetia Phillips-Dorsett Government House’s coordinator on health reform.
Alternatively the territory can add the $24.9 million to a pool of $275 million in extra Medicaid funding the territory would be eligible for over the next decade. If the territory can fund the 45 percent local match, it could access more federal Medicaid dollars over the upcoming decade than if the funding goes to subsidize premiums, Phillips-Dorsett said Wednesday.
If the territory is to implement an exchange, it must be up and running by January 2014. "We have to decide whether or not to pursue an exchange by Oct. 1, 2013," Phillips-Dorsett said. But some programs that would be involved with setting up an exchange have deadlines as early as March, she said, adding that they “are trying to finish in February and send a final recommendation to the governor in March," she said.
States can opt to use an exchange set up by the federal government, but territories like the U.S. Virgin Islands do not have that option, she said. Building an exchange from scratch is typically costing states between $30 and $50 million, Phillips-Dorsett said. "That cost is why several states have opted to have the federally run exchange."
To help decide what approach to take, the health reform task force has commissioned several studies, looking into the pros and cons and requirements of each option, she said.
In December, NewWave Telecom and Technologies, which Phillips-Dorsett said is working with the federal government on the federal insurance exchange hub, completed a study to see what computer and information system technology upgrades would be needed to set up the exchange.
NewWave reported that the territory’s existing IT infrastructure would not support all the functions needed for an exchange without major, expensive upgrades.
NewWave concluded the most viable way for the territory to implement an exchange would be to partner with a fully formed, federally approved exchange system from another state and to upgrade the territory’s IT infrastructure to be able to provide that system with local data.
Under the terms of the Affordable Care Act, that partner must have its own exchange and cannot be using the federal exchange.
The report identified five states that are committed to developing all the services needed to establish a fully ACA compliant exchange by the 2014 deadline, and concluded that Maryland, New York and Washington state are the best candidates for being on schedule and able to be partners, if they are willing.
But having a partner and being able to set up the infrastructure for the exchange is only part of the equation. There also have to be insurance carriers willing to set up shop and sell policies through the exchange, Phillips-Dorsett said. Currently no insurers are selling individual policies in the territory, she said. So right now, the task force is waiting on a private insurance market research report.
That study, which they expect to receive next week, will look at the current state of the health insurance market in the territory, to see what impact the closure of Hovensa has had, and "asking if we truly have seen a rise in Medicaid enrollment since the closure or a rise in people seeking individual policies," Phillips-Dorsett said.
The study will look at actuarial information about the territory’s population to see what sort of risk pool it comprises and will look "to see if carriers are willing to come back to the Virgin Islands and sell on the exchange," she said.
The territory’s residents may also be able to access the same insurers that opt to compete on the state-based exchange the territory partners with, she said. If so, that would increase the pool of potential insurers.
That report should be the final piece to help the task force determine what course to take, she said. The task force will meet and discuss the market report on Feb. 28.
"We are exploring all the options and really looking at making an informed decision based on real data," she said.