Guest Post: Why North Dakota Should Run Its Own Exchange

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While the Affordable Care Act or Obamacare is unpopular with most North Dakotans, the constitutionality of the health care reform was upheld by the Supreme Court and arepeal seems unlikely after the November elections. Like it or not, governors and state legislatures are now faced with the decision of whether to run their own insurance exchanges under the law or let the federal government run their state exchange for them.

This is a political blog, but we’re not trying to take sides — we’re looking for the best solution for North Dakota. Blue Cross Blue Shield of North Dakota is committed to being ready when most of the law goes into effect on January 1, 2014.  But there is plenty of work to do before then. My role at BCBSND is as manager of government relations, so I’m seeing the impact of the law firsthand.

Insurance companies must design new insurance products based on Essential Health Benefits that have not been approved yet, design computer changes and submit new plans and insurance for approval by the North Dakota Insurance Department. This all needs to be done before October 1, 2013 — less than a year from now.  Many of the federal regulations that will govern the law have also not been finalized yet.

One part of the law that has received plenty of media attention is the online Health Insurance Exchange.  Individuals and small groups seeking insurance options can visit an online state exchange to:

  • determine eligibility for Medicare, Medicaid or Healthy Steps
  • determine eligibility for a subsidy and how much
  • compare all plan options of coverage in four levels.

Federal grants are available to build state exchanges. Whether the exchange is operated by the federal government or the state, the exchange must be self-sustaining starting in 2015, meaning that people in the state will ultimately have to pay for the operating costs of the exchange, even if it is operated by the federal government.

We believe North Dakota should have a state-run exchange. Here’s why:

State control  The health law provides state flexibility for operating the exchange. Any changes in this flexibility would require a change in federal law and could not be done by simply issuing new regulations. This would allow North Dakota to choose what is best for North Dakota and not what may be better for New York. The state exchange bill that was defeated in November 2011 in the North Dakota House specified that all qualified health plans must be able to be offered by insurers in the exchange.  The federal government has hinted that it may limit the number of plan options. The government could even elect to not allow any North Dakota insurers into a federally-run North Dakota exchange. In a North Dakota-run exchange all insurance products would be permitted within the exchange, giving people more choices.

Dual regulation — Insurance regulation has historically been the responsibility of the state insurance department. Establishing a federal exchange could result in dual regulation — by both the state and the federal government. Insurance products might have to be submitted to both the state insurance department and also the federal exchange for approval, resulting in higher costs and lost time. Establishing a federally-run exchange will result in the state abdicating its historic preservation of insurance regulation. If people have insurance problems, will they have to deal with both the state AND the federal government?

Costs — North Dakotans will bear the operating costs. Who do you think will be most conscious of people’s concerns for these costs — a North Dakota exchange board made up of North Dakotans or the federal exchange?

Another option being offered to states is a Partnership Exchange, which allows the state to retain the authority to approve plans, rates and other general plan management options, including determining what products are permitted. The rest would be operated by the federal government. We believe this is the best transitional option instead of a federal exchange. It would hopefully prevent dual regulation and reduce exchange operating costs. North Dakota could later elect to take over management of its own exchange.

We believe that North Dakotans are best served by a state exchange or a partnership exchange offering some choice and flexibility. We urge state policymakers to consider all the facts before abdicating the state’s authority to the federal government. What do you think?

Rod St. Aubyn is manager of government relations at Blue Cross Blue Shield of North Dakota.

Rod St. Aubyn

Rod St. Aubyn is an independent Government Relations consultant, former lobbyist for a major health insurer, a former member of the ND House, the ND Senate, and a former Assistant Senate Majority Leader.

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  • sbark

    Good “opposite view” articles http://spectator.org/archives/2012/11/19/the-states-fight-in-the-last-dat

    and http://www.nationalreview.com/articles/333040/obamacare-still-vulnerable-michael-f-cannon

    Cato Institute’s Michael Cannon explains, “defaulting to a federal exchange exempts a state’s employers from the employer mandate — a tax of $2,000 per worker per year.” This is why more than half of the 50 have opted not to set up state-run exchanges.

    As Cato’s Cannon puts it, “[A] state-created exchange is not a state-controlled exchange. All exchanges will be controlled by Washington.” each exchange would cost its state an estimated $10 million to $100 million per year, necessitating tax increases.

    When it became obvious that many states would refuse to create exchanges, the Obama administration decided to funnel tax credits and subsidies through federally-created exchanges, ignoring clear language in the law indicating that such premium-assistance was restricted to state-run exchanges. The IRS recently finalized a regulation signaling its intention to illegally provide premium assistance through federal exchanges.

    This outrage prompted the state of Oklahoma to file an amended complaint in the U.S. District Court for the Eastern District of Oklahoma.
    The states are the last bastion of resistence against ObamaCare and its easily predicted 400% cost overruns, which happened with Medicare. Its human nature when something is perceived as “free”……..we just saw what that effect had in the lat election.

    • RCND

      The employer mandate exemption is reason enough

  • True Patriot

    It’s sad & disappointing upon reading the comments people believe they are Conservative but in reality are NeoCons; left leaning Marxists. Follow the Constitution follow pure Capitalism follow Religious freedom. You people are living in a fantasy world. You rejected Measure 2, how is that working out? The Measure 2 people told you what would happen & they were right; now they are being attacked by the government & you so-called Conservatives are quiet. The government wants NO questioning of their authority ” sit down – shut up & sit in the back of the bus” When the Measure 2 people’s rights are taken away all citizens rights are taken away.

  • RCND

    Rod, you forgot the obvious 4th reason… BCBS will benefit hugely from a state exchange. And I have no problem with that, but just say it

    • http://sayanythingblog.com Rob

      To be fair, I don’t know that BCBS is going to be in an admirable position whatever way this goes. Obamacare is a crap sandwich, both for the public and the insurance industry.

      BCBS is in survival mode. The exchanges are going to be a top-down government control of the insurance market. If the government, on a whim, decides to cut a company out of the market they can do that simply by not allowing their policies on the exchange.

      BCBS no doubt thinks that’s less likely to happen if ND sets up the exchange than if the federal government does. Maybe they’re right, but overall the exchanges are still bad for ND.

      • True Patriot

        Rob, ObamaCare was written by and for the Insurance companies; why do we not hear Insurance companies complain about ObamaCare? they love it “don’t throw me in the briar patch” Rob Please start thinking outside of the box!! Investigate-report not listen-report.

        • DakotacyrDakotacyrta

          You are exactly right. Insurance companies will gain millions of new customers. And that is why they are not complaining and want Obamacare to succeed. BCBSND will not lose out. More and more people are accepting Obamacare and the state should set its own course here.

          • http://sayanythingblog.com Rob

            Well insurance companies will get lots of new customers…as long as the government allows their insurance products to be sold on the market.

            Which may not be the case now. When I spoke with Rod on the phone, he said that BCBS is specifically worried about being locked out of a federal market. He also pointed out that all the new federal mandates are going to make premiums skyrocket.

  • Captornado

    Rod St, Aubyn is dreaming of blue skies and sandy beaches!

  • Mike Peterson

    Rod, first, I really appreciate BCBS trying to reach out and your explanation.

    However, the narrative followed around the country is that each state has TWO choices – either state-run or federal-run exchanges. You also cited the Supreme Court upholding the “constitutionality” of the Affordable Care Act.

    But where have they been the last 100 years or so as legislators from both parties have made it a career shredding that sacred document?

    I don’t need any ivy league lawyers to explain to me the 10th Amendment. I’m against both so-called “state control” and federal control; I’m for a THIRD option: nullifying this thing being shoved down our throats all together.

    I’d rather stand for freedom and reap the inconvenient consequences of dealing with federal government blackmail. I hope legislators in North Dakota feel the same.

    • Rod St. Aubyn

      Mike, thanks for your comment. States actually do have three options for exchanges:

      – one with more federal control

      – one with more state control

      – a partnership model

      Regardless of what you may think of the Affordable Care Act, it is now law and at Blue Cross Blue Shield of North Dakota we are tasked with preparing for its implementation. The nullification process is complicated and could take a long time and require approvals from several state legislatures. In the meantime, we are doing what we think is in the best interest of our members and North Dakotans to have more control over the ND exchange, not less.

  • Paul Sorum

    Rod,

    Where is the leadership at BCBS? You soundslike you are seriously considering
    either state or federal control of our healthcare insurance through ‘Exchanges!’
    Why in the world would you consider giving the government control of the sale of
    your products and think that there maybe advantages to this arrangement? When has government control of an industry ever lead to lower prices, better service, and more innovation?

    Get a grip.

    My father-in-law, Mayo Christian, was president of BCBS of ND for many years. More than one U.S. president consulted with him at the White House on how to improve healthcare in this nation because he was a LEADER in his field. He would have never allowed the federal government or the state government to control the sale of the Blues’ products through an ‘Exchange’ of any type. This type of surrender of control to the government is suicide in the business world and everyone knows it. We used to call this type of control over the private sector ‘Communisim’ but we are told we can’t use this word any more because it might offend some on the far left.

    It is appalling that you would take many years of innovation and financial reforms which have been developed at BCBS of ND and flush it down the toilet with your spineless appeasement of those who are forcing socialized medicine on us against our will. It doesn’t matter that the U.S. Supreme Court has ruled it is a ‘tax’.

    The State of North Dakota is sovereign. As such, we have more power than Washington D.C. when it comes to regulation, when it comes to deciding what is constitutional, and when it comes to deciding what is best for the people of this state.

    Shame on you for selling out the people of North Dakota to the hard tyranny known as ‘Obamacare.’

    Paul Sorum

    • Dakotacyr

      Paul, the state legislature controls the insurance industry. The state legislature adds mandates all time to the insurance industry. Not much of difference here, but getting more people covered to lower the cost for all should be a leader’s concern wither in the government or at BCBS.

      • http://sayanythingblog.com Rob

        Well, there is a huge difference, as under Obamacare the federal government can now impose insurance mandates on the state. And they’re already doing so. Vision and dental coverage will be mandated, whether you want them or not, as well as things like contraception and abortion coverage, even if those things violate your religious beliefs.

        And the net result of all these new mandates will be health insurance that is hugely more expensive.

      • Geoff

        Another fallacy. No one out there believes this law will lower costs or premiums. As a matter of fact I still think Port is still waiting for heitkamp to explain how this law bends down the cost of care like she promised in her campaign.

    • Rod St. Aubyn

      Paul,

      Thanks for the comment and for sharing your thoughts. Blue Cross Blue Shield of North Dakota has collaborated with others in the state to improve North Dakota’s health care system and as a nonprofit member-driven company we continue to look for ways to give members more control of their health.

      We’re not trying to “sell out” North Dakota. We want more North Dakota control over the state’s health care system, not less.

      Like it or not, the ACA is now law, and if BCBSND wants to continue to sell insurance products in North Dakota, we will have to comply with the law. There will be a ND exchange under the law. We believe that a state-controlled or a partnership exchange would be better than a federally-run exchange as it would give the state more control and flexibility.

      We would rather North Dakotans make decisions about how the ND exchange is
      operated than someone in Washington, D.C.

      • Geoff

        Rod, I’m quite positive that you know more about the exchanges than I or anyone else commenting on this site. That said, I find it hard to beleive in any situation that the state will have any control whatsoever. You can sugar coat a poison pill, but it will still kill you.

        Let the Feds run it and in due time it will completely fall apart. And Paul sorum is correct, this is communism.

        I know BCBS is in a tough spot and now it’s time to show leadership. I ask of you, please stand up for the good of all your policy holders. Take a stand! I like my policy with bcbs, it’s a great product and I want to keep it.

    • JW-American

      Sorum you gotta lotta balls to come on here and bitch about Obamacare, you and your “Followers” did absolutely nothing to help promote Rick Berg or Mitt Romney, in the months leading up to the election. Istead you ran for Flipping Governor, and won what 4% of the vote, why not Senate, Hell it wouldnt have been any worse, the way your followers treated Con. Berg.

      As a result, our last, very fricking last- firewall between the most egregious policy to come out of Washington DC since the 1940’s interment camps is now and will remain FEDERAL LAW.

      You can hide behind your “Constitutional Conservative BS” all you want, but when the enemy is firing at me, I don’t care how’s feeding me ammo, I just need to beat them back. Due to your crew of dissatisfied Ron Paulers, we’re stuck, Hiedi has the vote in the Senate rather than Rick, and B. Hussian Obama is Flying ’round the world on borrowed money, passing it out like some freeking Candyman.

      Thanks Mr. Sorum, now we will all learn the hard Tyranny of Obamacare.

  • Clint F

    It’s amazing to see all these insurance company executives hop on board Obamacare, when it’s clear even from a layman’s perspective that the sole purpose of Obamacare is to drive them out of business.

    As to the fallacy of state control of an exchange, that was succinctly addressed by Adam Hamm during testimony to the interim committee on health care reform. Either you let the federal government run the exchange exactly its way, or you make the state run the exchange exactly the federal government’s way. No exchange which does not comply with all the criteria of the federal exchange will be accepted.

    By your logic, if I say, “I’m going to tie you up, put you in the trunk of a car, and roll it off a cliff,” you’d say my plan is awful. Yet if I say “I’m going to give you this car, hand you the keys, and you can have it as long as you drive it off that cliff,” you’d say…”Gee, thanks! Free car!”

  • Clarence A. Herz

    I call bullshit.

  • C. Y.

    The feds will have ultimate rule making on any exchanges so thinking the state will have any say at all is a joke. The exchanges are mainly to get rid of any smaller insurance companies so the big ones like BCBS can take over.

  • The Fighting Czech

    Rod,
    I tried to get insurance through BCBS (ND) for my wife and I several years ago. It was the most outragous 8 months Ive ever experienced. The number of times I was told which plan would work for me, when i jumped through all the hoops answered all the questions…6 weeks later,… i was told I didnt qualify, a couple of times, the application time period had expired? a couple more times. a couple of times I was informed everything was a go, and the coverage should be available in the next 24 hrs. and Poof….. it disappeared. it was the most absurd experience I ever had…. the people on the phone basically sounded like I was bothering them, I even spoke to a supervisor and explained the situation to him, and he didnt see a problem, To which i had to say to him, that maybe he was the start of all this crappy service.
    While I hate the thought of Obamacare, Your company is one of the reasons why we are now stuck with it. Years of arrogant behavior, is the reason why your companies days are numbered..

  • Demosthenes

    Rod,

    I applaud your attempt but as you can see on this blog all you get are comments from the wing nuts who still clutch to the repeal idea.

    • http://sayanythingblog.com Rob

      I think there has been a rather useful discussion here.

      And I think that if you spoke to Rod directly, he’d tell you that Obamacare is going to make health insurance far less flexible and far more expensive than it was before.

      Don’t confuse this post with BCBS’ endorsement of Obamacare.

  • Lynn Bergman

    The assumption of the very first paragraph is FALSE. Governors and state legislatures are not faced with only two decisions… whether to run their own insurance exchanges under the law or let the federal government run their state exchange for them.

    A third and far more rational decision for North Dakota leaders to embrace is to “stay the course” regarding its prior session’s decision to nullify the law. Instead, North dakota will be better served with a TOTALLY INDEPENDENT STATE EXCHANGE that will be far less costly to North Dakotans due to our relatively insignificant number of uninsured, consistently high work ethic, and subsequently low unemployment rate.

    K-12 education is perhaps the best example of an area where North Dakota would be far better off (actual IMPROVED OUTCOMES instead of “flat-lined” outcomes) by rejecting federal funds than by accepting the federal dollars (borrowed from foreigners and repaid by our grandchildren) which cost more to implement than if we had rejected them.

    It is high time North Dakotans realize that federal involvement in anything other than national security and commerce (roads bridges, etc) will be our nation”s undoing… and that we are closer to a national bankruptcy than any of us are willing to admit.

  • Yogibare

    The Wall Street Journal of Nov 20 or 21 has a lengthy op-ed piece about the choice of Federal run exchanges or State run; they favor and recommend that the states turn it over to the feds and see how they survive. There is no money allocated for federal exchanges—will the congress allocate money? ACA is not yet a “done deal”.

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