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Health Insurance Exchanges under the Patient Protection and Affordable Care Act in Ohio

U.S. President Barack Obama signed the Patient Protection and Affordable Care Act (also known as the PPACA) on March 23, 2010 and enacted one of the most sweeping health care reform legislation in the nation's history. Among the programs introduced under the Act is the establishment of Health Insurance Exchanges in every U.S. state. Under the rules of PPACA, state governments have the option to develop and operate their own Health Insurance Exchange, enter into a partnership with the federal government in the development and operation of the Health Insurance Exchange, or default to a federally run Health Insurance Exchange. States will however retain the right to regulate the health insurance industry and make Medicaid eligibility decisions.

The states took different directions in implementing their Health Insurance Exchange and Ohio is among the states that have refused to develop and operate their own, thereby leaving the task to the federal government. With this decision, the state of Ohio will have sort of a "one-size-fits-all" exchange to be implemented by the federal government. The Health Insurance Exchange will provide subsidies in the form of premium credits and special programs to enable people earning between 100-400% of the federal property level. The federal government will screen private insurers that can trade in the Health Insurance Exchange and these companies must be able to sell near identical insurance products as well as share costs and profits for a while.

Republican Ohio Governor John Kasich has notified the U.S. Department of Health and Human Services in November 2012 of the state government's decision not to run a Health Insurance Exchange. Governor Kasich claims that a panel of qualified health policy specialists had recommended that the state need not run an exchange. The panel concluded that under a state-run Health Insurance Exchange, state governments will have little control over its operation. The rules governing the exchanges have little flexibility and would not be able to effectively serve the unique requirements of Ohio residents and Ohio insurance companies. Another conclusion is that a state-run exchange would be a drain on the state's resources as it requires over $60 million to set-up and roughly $43 million to run it annually.

In addition to the lack of flexibility and the high cost of creating an exchange, there is very little information about the program coming from the federal government, particularly the rules that will answer how benefits must be offered in the health plans, how the federal government will provide for the Health Insurance Exchange upkeep, and the requirements that multi-state insurers must meet in order to sell in the exchange.

It is said that the Health Insurance Exchange will uniquely impact Ohio in a negative way. The state has been enjoying a sterling reputation for managing a well-regulated and very stable health insurance market, thereby attracting insurance companies to operate in the state. The rules of a Health Insurance Exchange will disrupt the solid market dividing it into insurers that sell in the exchange and those that sell out of it. This disruption will result to higher premiums and fewer choices for consumers.

What the Ohio government will ensure is that it maintains control over its insurance industry. The state has been regulating its insurance industry successfully for 60 years. The industry is very relevant to the state's economy providing over 400,000 jobs so that maintaining regulatory control is important. The state government believes that a federal government takeover of the industry is burdensome and duplicative.

Under option that the PPACA offers to states is whether to turn over to the federal government the decision on who will be eligible for Medicaid, or to retain it. The state of Ohio has decided to turn over the decision-making reins on Medicaid eligibility to the federal government. The state government claims that it has worked hard at improving the delivery of health care to low income families and individuals through Medicaid. The state's Medicaid program focuses on residents with mental health problems, chronic conditions, and mothers at risk of giving birth to low weight babies. This targeted care has improved the value of services offered by the state to its taxpayers.

Governor John Kasich and his Lieutenant Governor Mary Taylor want health care coverage for every resident of the state of Ohio. They believe that the path towards achieving this goal is a market-based health care system that will result in lower costs and higher quality of care. The concept of a state-run health insurance exchange overseen by the federal government can drive up costs and reduce consumer choices, which is misaligned with the state's health policies and goals.

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