Consumer Advocates Weigh in on Nebraska State Health Exchange

This morning, Governor Heineman invited a broad range of consumer advocates to give testimony on the creation of a state-based health insurance exchange in Nebraska.  Nebraska Appleseed was one of the organizations that offered testimony – expressing our hopes that a state exchange will be focused on the consumer and increase access and affordability of coverage.

The Affordable Care Act requires each state to have a health insurance exchange up and running by January 1, 2014, but gives states the option of creating its own exchange, partnering with the federal government, or allowing the federal government to create an exchange for the state. Consumer groups were asked to provide testimony on the preferred kind of exchange (state-based, partnership, or federally facilitated), and on how to fund it. Read Nebraska Appleseed Health Care Access Director Jennifer Carter’s testimony

One question that was raised multiple times was whether it would be better to save the money that the state would spend on the exchange and use it for other purposes, leaving the cost of the exchange completely up to the federal government. But the assumption that general fund dollars will have to be used to support the exchange does not reflect the requirements of the law.  There are two costs associated with the exchange and none of that money should come from general fund dollars.

First, there is a cost associated with setting up the exchange, whether the state or federal government creates the exchange.  If the state opts to set up its own exchange, it can apply for and receive a federal establishment grant, which will cover the cost, meaning that the state should not have to spend any general fund dollars on the start-up.  If the federal government creates the exchange, those same federal grant dollars would be used by the federal government to create the exchange.

Second, under the ACA, an exchange must be structured so that it is self-sustaining, meaning that it shouldn’t require general fund dollars to keep it running. States have a number of options when it comes to funding an exchange for the long-term, including user fees, provider assessments, taxes on things like cigarettes, revenue from website advertisements, and more. Federally-facilitated exchanges will also have to be self-sustaining, and will have the same options as state-based exchanges.

Nebraska Appleseed has supported, and will continue to support, the creation of a state-based exchange, but we are not opposed to a federally facilitated or hybrid exchange. In the end, it’s not about who runs the exchange, it’s about doing what’s best for consumers and increasing health care access to the 217,000 uninsured Nebraskans and the thousands more who struggle to afford medical care.

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