KHI News Service

Knowledge gap: The ACA marketplace is coming but who knows?

Navigators will try to explain Obamacare and connect people with affordable health plans

By Dave Ranney, Mike Shields | May 13, 2013

Enrollment for health insurance coverage through the Affordable Care Act’s new online marketplaces is scheduled to start Oct. 1 in Kansas and across the nation.

But it is clear that many, if not most, of the millions of people expected to benefit from the so-called “insurance exchanges,” still know little or nothing about how the marketplaces are supposed to work or the law behind them.

‘Deeply in the hole’

“I don't know much about it. I really don't. We’ve heard a few things,” said Sherri Calderwood, a Topeka waitress whose family has gone without health coverage most of her working life. “I think I heard through the grapevine that Kansas isn't going to do the Obama healthcare through (Gov. Sam) Brownback. So, I'm not real sure what's going to happen. It's a scary situation."

Calderwood said she thought Obamacare might “greatly, immensely help us and our family with health insurance,” but that she wasn’t sure how or when.

“I had insurance when I first got out of high school for about six months when I worked at Frito-Lay,” she said. “But then we couldn't afford it because we couldn't pay bills and afford health insurance at the same time and so we had to give up one and health insurance was it.”

Calderwood said neither of her two sons, now in their 20s, has coverage.

“My son actually had four surgeries on his knees in the last three months and his medical bills total over $300,000,” she said. “We're talking about a 25-year-old child with no health insurance. So, here he starts his life in the hole. Deeply in the hole. Almost a half million in the hole.”

She said her sons don’t know much about Obamacare or the coming insurance marketplaces, either.

Calderwood is the type of consumer most likely to be helped by the exchange, according to the head of the state’s largest health insurance company.

Andy Corbin, chief executive of Blue Cross Blue Shield of Kansas, predicted the overall cost of coverage on the individual and small-group markets would go up because insurance companies would be assuming new levels of risk.

32% FPL — Single: $3,574 / Family of four: $7,376

100% FPL — Single: $11,170 / Family of four: $23,050

400% FPL — Single: $44,680 / Family of four: $92,200

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In Kansas next year, those earning between 32% and 100% of poverty level will likely neither qualify for Medicaid nor tax credits to buy insurance

But he said the federal subsidies would mask those premium increases for many Kansans who have incomes between 100 percent and 400 percent of the federal poverty level.

“It’s going to create new opportunities for people who don’t have any insurance at all,” Corbin said. “And for those people who don’t make much money but who have had insurance, it may save them some dollars.”

Corbin said the exchange would require Blue Cross Kansas to focus more on consumer education than sales because many of those purchasing coverage through it would be buying health insurance for the first time.

“That’s going to be our challenge,” he said.

Knowledge gap

The federal government on April 30 released the forms for people who want to sign up for coverage through the exchanges, but that news got relatively little attention.

Federal officials are aware of the knowledge gap and are trying to combat it. Among other things, they are offering grant dollars to groups that will help consumers such as Calderwood and her family “navigate” the new online systems.

Last month, federal officials announced the availability of $56 million in “navigator” grants designed to help consumers become aware of and use the exchanges. Kansas’ two grants are capped at $600,000.

Cathy Harding, executive director of the Kansas Association for the Medically Underserved, is leading a consortium of state associations that is applying for one of the grants.

“The educational piece, I think, is going to be bigger and more of a challenge than the actual enrollment piece,” Harding said.

The navigators or consumer guides are expected to be a mix of volunteers and health care workers. They will be trained and certified by the U.S. Department of Health and Human Services. They will not be allowed to tell consumers which plan to choose. Instead, their role will be limited to informing consumers of their options and assisting them with the online transactions involved with enrolling in a coverage plan through the marketplace or exchange.

A key component of the Affordable Care Act, the new marketplaces are intended to ensure consumers access to adequate and affordable coverage. The reform law requires that most Americans who can afford it to have health insurance by Jan. 1 or pay a penalty. Federal subsidies in the form of tax credits will be available to those couldn’t otherwise afford premium costs.

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Andrew Corbin, chief executive of Blue Cross Blue Shield of Kansas.

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Consumers will be free to buy insurance outside the exchange, but to qualify for the subsidies they must buy a plans offered through the exchange. Plans on the exchange must meet federal standards that include certain “essential benefits.”

The state’s dominant health insurance companies have said they intend to participate in the Kansas exchange: Blue Cross Blue Shield of Kansas, the state’s largest commercial health insurer; Blue Cross Blue Shield of Kansas City, and Coventry Health Care of Kansas.

Insurance agents

Insurance agents are prohibited by federal regulations from being exchange “navigators,” if they are paid commissions from an insurance company that offers a plan or plans through the exchange. The prohibition is intended to safeguard against agents steering consumers to particular plans the purchase of which might benefit the agent.

But the rule means few insurance agents are likely to participate in the exchange or marketplace, according to Lou Smith, president of the Kansas Association of Health Underwriters and an independent agent with Richey Health Benefits, a Wichita-based consulting firm.

And that means some consumers who might otherwise have relied on their insurance agents to help them sort through the offerings on the marketplace will have to look elsewhere for help.

Jim Hissong, who owns Jim Hissong Insurance Agency in Lenexa, said he thought “a very high percentage” of independent agents would be willing to take part in the exchange, if they knew how they would be paid for it.

“We’re here to help and to take care of our customers. That’s what we do,” Hissong said. “But at the same time, you have to ask yourself: Would go to work if you weren’t getting paid?

Hissong has sold insurance for almost 42 years and is a past president of the Kansas Association of Health Underwriters. He said he’s not written off the possibility of taking part in the exchange.

“I have customers who for one reason or another have lost their insurance,” he said. “They’re still my customers, and I have every intention of taking care of my customers.”

Harding, at KAMU, said she wasn’t sure if the absence of insurance agents from the exchange would make much difference, given that many of the those turning to it for coverage would — like Calderwood — be people who have gone years without health insurance because they couldn’t afford it.

“Most — but not all — of the people who are going to become insured through the marketplace certainly are going to be low-income and have not been shopping for health insurance with their local insurance agent,” she said. “They probably haven’t even thought about shopping for health insurance. If you’re living at 120 percent of the federal poverty level, that hasn’t even been an option you.”

—Staff writer Jim McLean contributed to this report.

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