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WASHINGTON - When John Kaelin uses the word "churn," he is not referring to old-fashioned butter making. As UnitedHealth Group's senior vice president for health reform, Kaelin is talking about poor people going back and forth from having government pay for all of their health care to having to pay for some portion of it themselves.
In the brave new world of U.S. health care reform, roughly 33 million uninsured Americans will get health coverage. The government will pick up the entire tab for some of them as part of an expansion of Medicaid. The government will pay only a portion of the costs for other newly insured citizens who will be covered by private insurance companies, such as Minnetonka-based UnitedHealth.
So what happens when rising and falling income forces folks from one category to another?
If people drop out of the health insurance market when they have to pay and head back to emergency rooms for inefficient and expensive care, a huge part of health reform collapses. Such are the obsessions of Kaelin, a man who helps lead one of the country's biggest insurance companies in one of its biggest undertakings.
Kaelin's in-depth knowledge of the new health reform law, the Affordable Care Act, makes him an in-demand speaker around the country. He spoke recently at a conference in Washington about how so-called health insurance "exchanges" at the state level will help the poor maintain health plans they can afford. He sat down with the Star Tribune to discuss why state health insurance exchanges are as vital to reform as the more highly publicized court battle over mandating that people buy health insurance.
QWhat is the relative importance of exchanges in health care reform?
ARight now, we have a Medicaid program that covers children very effectively. And it covers some parents. It covers the disabled as well. For individuals that might be making $10,000 or $12,000 or $13,000 a year, if they're not a child and they're not a parent, it's very difficult for them to get Medicaid coverage. In fact, it's almost impossible.
So the first thing the Affordable Care Act does to expand coverage is it expands Medicaid up to 133 percent of the federal poverty level [just under $14,000 per year for one person]. After that, the Affordable Care Act says, we're going to create this new mechanism [exchanges] to do a couple of things: One is help people who are just above the poverty level all the way up to 400 percent of the poverty level with subsidies that they can get to purchase insurance ... We [also] need to determine eligibility. What program do you belong in? Do you belong in Medicaid or do you belong in this subsidized program? We need to go to one central place to have this determined. Think of the exchange as an eligibility traffic cop. The next thing that exchanges are going to do is create a new marketplace for people buying individual coverage.
QHow do private companies get to be in the exchanges?
AThe regulations envision these exchanges qualifying health plans to offer coverage. Each state is going to have some flexibility in how they want to engage in that process. But it's expected that all the plans are going to have to meet minimum network requirements. Do you have enough doctors? Do you have enough hospitals to support in enrollment?
QAre exchanges going to simplify things? For instance, I heard that Medicaid now has six different categories just for pregnant women.
AEverything suggests that we want a simplified enrollment form. We want to move to income-based eligibility. One of the reasons we had all the categories is ... asset tests -- Do you have a car? Do you have a house? Those kinds of things go away in 2014. That will help to simplify. But those are government policies. We'd like to be able to educate [people] so when they come to us they have health literacy.
QWhat do you think makes someone health literate?
AFirst, just knowing that there is a program called health reform and that you can actually get coverage. Knowing that if you don't get coverage, you'll have a penalty. Educating people around that is going to involve the government. It's going to involve some of the big advocacy groups. Health plans will want to do that. Education about the coverage is going to be important ... Here's a primary care doctor. Here's how you access the network. Ideally, you want to have a health medical home. You want to use that health home to meet your needs and not go to the hospital emergency room for routine care.
Then, there are the financial interactions -- understanding what my premium is, understanding what a deductible is, what co-insurance is, what an out-of-pocket cost is. It's complicated and we've got to figure out a way to make it simpler.
QOne study reported that when the exchanges are created, up to 10 percent of companies might drop their health insurance coverage. Was that supposed to happen?
AExchanges are pointed to people who don't have access to employment-based insurance. Employers have a financial disincentive [a fine] of $2,000 per employee when they don't provide coverage. But from a basic, big picture insurance concept, if we have large numbers of people in the [exchange] risk pool, that will tend to promote stability.
QAre people really moving forward on this or, because of all the talk about stopping reform, are they hesitant?
AI've met with many states. There is a lot of good analysis and discovery going on -- understanding what's required of them, understanding what some of the key issues of the exchanges are, understanding eligibility, which is massive and a real key to success.
QDo you see anybody holding back because they think there might be a regime change?
AI'm more on the business side, so I can't assess the politics.
Jim Spencer • 202-408-2752