Wash. Online Insurance Exchange Will Carry Coverage

March 12--From the outside, you'd never guess what's going on in the nondescript old building across Capitol Way from the Starbucks in downtown Olympia.

Within those painted concrete slabs, an agency few have heard of is completely reinventing the way people and small businesses will get a precious and often unattainable commodity: health insurance.

Back in the 1960s, the building housed a J.C. Penney store. Since then, the years have not been kind. The clothing store's wide glass entry is gone. In its place stands a blank wall. The entrance is out back, a single door that opens to a crowded parking lot.

The only sign is printed on a piece of typing paper, taped to the door.

Inside these makeshift quarters, worn industrial carpet runs from cubicle to cubicle. The work spaces have rapidly filled with new employees: Intense software wizards. Middle-aged veterans of health insurance companies and government service agencies. Technical communication experts, hired away from such companies as Microsoft. Project managers, skillful in the execution of complicated timelines.

All of them work for a new player on the Olympia scene, the Washington Health Benefit Exchange. The Legislature created it to carry out Washington state's implementation of the Patient Protection and Affordable Care Act, commonly known as Obamacare.

At the moment, the exchange has about 60 employees. It is funded with $150 million in federal startup grants. That money has to last through 2014, when the exchange will become a private enterprise, supported with fees to be built into the cost of health insurance.

Several blocks away, girders rise skyward for a new, leased building the agency hopes to occupy sometime this summer.

The agency's task? Create and run a website where millions of Washington residents will get subsidized health and dental insurance coverage.

Which residents? Not Medicare clients. And not the people who have large-group insurance through an employer. The site will focus on everyone else:

--Applicants for Medicaid, the government health care program for lower-income people. Medicaid is expected to expand, funded by federal dollars.

--Middle-class workers who have no coverage or costly individual policies and need a better deal. Federal subsidies will provide that better deal.

--Small businesses, which often cannot find affordable coverage for their workers.

According to Richard Onizuka, the exchange's CEO, "our best guess" is that 60 percent of the website's users will be previously uninsured.

For Medicaid users, the site will determine eligibility and forward eligible clients into that system's statewide array of managed health care providers.

For non-Medicaid users, the site will serve as online mall for health insurance. Carriers will compete for purchasers' business. Consumers will comparison shop, with help from a star-based rating system. They'll choose from standardized coverage levels: 60 percent "bronze" coverage; 70 percent "silver" coverage; 80 percent "gold" coverage; 90 percent "platinum" coverage; or, for those under 30, preventive/catastrophic coverage with a high deductible. Regulations require every plan to cover a list of 10 "essential" benefits. The goal is a fair, apples-to-apples basis for competition among plans.

The 10 essential benefits: ambulatory, emergency, hospitalization, maternity and newborn, mental and behavioral health and substance abuse, prescription drugs, rehabilitation, laboratory services, prevention and chronic disease, and pediatrics including oral and vision care.

Separately, the site will sell dental insurance plans as well.

The star-based ratings, officials say, will be based on hard data from medical claims and outcomes. Does a plan cover cholesterol checks? Does it provide annual eye and foot exams for diabetics? What about mental health; how well is that handled? "There's a lot of research going on right now" into the details of that rating system, Onizuka says.

Federal law calls for the site to be operational on Oct 1. The coverage it sells will take effect Jan. 1, 2014.

Tough federal rules will govern that coverage. The rules prohibit common insurance practices that make coverage unaffordable or unavailable, such as raising rates or canceling coverage when people get sick.

The site is already up and running, though it's unavailable to the public. Deloitte LLP, a contractor hired to build it, has been rolling out version after version, designing, tweaking, testing, getting feedback.

Onizuka, a specialist in health care technology, says Washington's site is further along than similar sites under development in other states. Together with Maryland, Washington's website was the first to qualify for testing against the federal government's data hubs.

"We are sort of a pace car state," Onizuka said. "We wanted to build it the way that fits Washingtonians the best."

In states that don't build their own websites, residents will use a site being built by the federal government.

Security's an obvious priority. The Washington "Health Plan Finder," as the site will be known, faces a rigorous testing schedule in the coming months. Independent security and quality-assurance experts have been hired to scrutinize how well it works, Onizuka said.

The finder's application process must interact with federal data hubs to determine eligibility for benefits and subsidies. The Department of Homeland Security will verify an applicant's U.S. citizenship. The Internal Revenue Service will verify an applicant's adjusted gross income. If the applicant's information matches these federal databases, the result is an eligibility decision: You're covered, and you're eligible for subsidies, in such-and-such an amount. To sign up, click here.

How many will use the site?

In Washington, more than 727,000 adults have no health insurance. But that's not the whole picture, says Michael Marchand, communications director for the exchange. One of the big "wild cards," he explains, is how many additional people are underinsured; they've got coverage, but it's inadequate. Their rates might be sky-high because they have a chronic illness, or they might work for a small business with one sick employee who drove up rates for everyone in the business's tiny, group-rated insurance pool. So their benefits might be minimal, to hold down costs.

This could make the pool of website users larger than expected. But until the system launches, all the state can do is make estimates in each of the three customer categories:

-- Medicaid. As soon as the site opens for business, it will be the only avenue to apply for Medicaid. Today, a Medicaid application takes up to 45 days to process. On the Health Plan Finder website, an application and response is expected to take 15 to 30 minutes. This change, together with a planned publicity campaign, is expected to increase enrollment among those who are eligible but haven't signed up.

Currently, Medicaid has 1.2 million beneficiaries. According to the state Health Care Authority, which runs Medicaid, the expansion will open Medicaid to as many as a million more people. Not all of those are expected to sign up right away. The authority estimates that another 328,000 people could join the Medicaid ranks via the exchange when Medicaid expands.

-- Individuals. New federal subsidies will attract insurance buyers with incomes too high for expanded Medicaid. The subsidies will be available up to 400 percent of the federal poverty level (an income of $94,200 per year for a family of four). Currently, individual coverage is so expensive that few buy it, according to the U.S. Department of Human Services. On the Health Plan Finder website, issuance of coverage is required regardless of the applicant's health, which insurers are not allowed to consider. Officials estimate 280,000 people will buy insurance, made more affordable by the federal subsidies, in 2014. By 2017, the exchange expects 471,000 subsidized insurance buyers.

-- Small-business employees. Today, some small employers cannot afford coverage for their workers. The Affordable Care Act offers subsidies, both to businesses and their employees, for getting on board. A small business, Marchand explains, will be able to pick a coverage level for its employees, decide how much the employer will contribute, and set itself up on the Health Plan Finder site. Then, the business's employees can go to the site, enter their information, determine their own eligibility for subsidies and purchase coverage.

Not everyone has Internet access, and not everyone has heard what the Affordable Care Act offers. For that reason, part of Marchand's job is to get the word out. The exchange will offer in-person assistance, in the form of trained "navigators," who will be deployed around the state to explain and interpret the system. For those who need personal assistance, lack computers or have questions while using the website, the exchange plans a telephone call center.

That call center will be based in Spokane, opening in September and creating 60 jobs, Marchand said. Faneuil Inc., of Hampton, Va., won the contract to operate the center.

With the Oct. 1 deadline drawing near, something like panic might be expected at the offices of the exchange. If it's there, it's well hidden.

Marchand knows the path will not be smooth. Technology comes with glitches. People can be balky. Change creates confusion.

"Somewhere down a dirt road in Omak, there's going to be a guy sitting on a porch with a shotgun and saying, 'I'm not gonna sign up for your lousy coverage. And get off my land.' That's just a reality." On the other hand, he said, "all the people here are unwavering in their belief of getting this done for the people of this state. They're glass-half-full people. They're optimistic about the change. And when people say Oct. 1 is coming up quickly, they take it as a dare. It's a very cool attitude."

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