The D.C. Council will face an important decision on June 4. That’s when it will vote on whether to adopt legislation setting up the District’s Health Benefit Exchange under the Affordable Care Act, as recommended by Mayor Vincent Gray and the District’s Health Benefit Exchange Authority.
Importantly, the legislation would make the Exchange the sole marketplace for individuals and small businesses to buy health insurance beginning in 2015. DC Appleseed Board member Deborah Chollet and I testified in support of the legislation at the Committee on Health’s May 13 hearing, where we were joined by an impressive cross section of employers, consumer advocates, healthcare experts, and D.C. officials.
As we testified before the Committee, individuals and small businesses will benefit from having a single, transparent market that will finally make the D.C. market competitive. Right now, that market is not competitive. The largest company—CareFirst—dominates that market, holding more than three-fourths of individual and small group plans. As a result of this dominance, that company been able to charge premiums that have produced a steadily rising surplus that is now nearly $1 billion.
Once the Council establishes a single place to go for full information about all available plans, consumers will be able to find insurance that suits their needs at the lowest price. Such transparency is already expanding access to more affordable, more competitive healthcare elsewhere, such as in Oregon, where the prospect of competing on that state’s exchange caused several insurers to rethink their request to hike premiums.
DC Appleseed also supports Councilmember David Catania’s amendment to the legislation, which would require the Department of Insurance, Securities and Banking to assess the fairness of rates for plans sold through the Exchange. As we recently wrote to the Committee, with respect to the District’s largest insurer, CareFirst, this rate assessment should apply the standard the Council adopted for CareFirst four years ago: that the company—a charitable and benevolent nonprofit—must invest in community health to the “maximum feasible extent.”
The principal opponents of this legislation are those in the insurance industry, including especially CareFirst, which would profit most from continuing the status quo for as long as possible. They make two arguments against the legislation.
First, they say that precluding them from selling health insurance outside the Exchange will “close markets” now available to consumers. But the legislation actually does the opposite; it makes sure that consumers can shop across the entire market by going to one easily understandable web site or making one phone call.
Second, opponents say the Council should delay the Exchange’s implementation for two to three years so it can be tested to see whether it works. And during the testing period, they say, CareFirst and its brokers should be allowed to do business as they always have-outside the Exchange and not subject to the same disclosure of information as plans on the Exchange.
But of course, if the Exchange’s unified marketplace will benefit consumers—and we believe it will—then the Council should not delay establishment of that marketplace. And while we agree that testing the success of the Exchange is a good idea, it cannot be fairly tested unless it is set up as the Mayor and the Exchange Authority have proposed—as a single market readily accessible to consumers. The test being proposed by the Exchange opponents—allowing them to do business as usual—is one designed to make sure the Exchange will not work as well as it can.
The District has an opportunity through the proposed Health Exchange legislation to finally bring badly needed competition to our insurance market for individuals and small employers, benefiting residents most in need of affordable health insurance. We urge the Council to adopt it on June 4.