Planning a one-stop shop for health insurance

State council offers guidance on insurance reform


Flash forward to the future: The year is 2014, and Illinois residents are buying their health insurance in a new way. Instead of fumbling with numerous complex health insurance plans, they have the option of buying pre-approved, comprehensive plans through a state-administered website. That’s how a state council on health reform envisions it.

The Illinois Health Care Reform Implementation Council released on Feb. 4 its first recommendations for how the state should handle federally-mandated reforms to health insurance, and these recommendations could determine whether reform actually works in Illinois. The changes are mandated in the federal Patient Protection and Affordable Care Act, often shortened to ACA, which takes full effect in 2014 and includes a timeline for implementing some reforms before then.

Among the council’s recommendations is that Illinois should get a jump on setting up a public insurance exchange before the federal government imposes its own version.

“It is in the best interest of employees and families in Illinois for the state to retain control of such an entity,” the council’s report says. By ceding responsibility for the exchange to the federal government, the state would lose significant oversight and consumer protection authority.”

Illinois should begin the exchange with an “active purchaser” model, in which the state hand-picks insurance plans that offer the highest value, the council says. Once the exchange is well-established, however, the council recommends that it transition to a “market organizer” model – one in which all coverage plans that meet the minimum requirements are offered.

“The market organizer model may offer too many choices for consumers, who could find the process overwhelming,” the council’s report states. “The active purchaser model could increase competition, thus reducing the price of premiums or increasing the quality of service or benefits for consumers. On the other hand, if the requirements to enter the exchange are too strict, it could fail to offer consumers sufficient options, resulting in a marketplace that is neither competitive nor appealing to individuals or businesses. The challenge is to balance the benefits of a competitive marketplace with one that is consumer-friendly.”

Perhaps in recognition of Illinois’ ongoing financial troubles, the council recommends that funding for the exchange not rely on the state’s general revenue funds, in order to ensure financial stability. Instead, a separate long-term funding mechanism needs to be identified, the council notes.

New federal regulations under the ACA should also be mimicked in state law, the council says. Furthermore, the authority of the Illinois Department of Insurance to regulate rate increases and medical loss ratios – the percent of income insurers use to pay for actual health care – should be incorporated into state law as well.
Illinois must also remove barriers to the formation of nonprofit member-run insurance cooperatives, the council says, which could provide more coverage options.

On Jan. 31, a federal district judge declared the entire ACA unconstitutional, though federal and Illinois governmental bodies have continued to implement it in anticipation of a favorable ruling from the U.S. Supreme Court. Two other federal courts have upheld the law, while another federal court struck down the ACA’s individual requirement to purchase health insurance. The high court has not announced whether it would consider the issue, but it may delay until 2014, when the ACA takes full effect.

Contact Patrick Yeagle at

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