New Kansas health insurance mart meets skepticism


TOPEKA — Justin Hill expects the cost of health insurance for his more than 40 employees to skyrocket when the new electronic health insurance exchange opens in Kansas in 2014.

Hill is president of the Lawrence Paper Company, a Lawrence family-owned business that in 1882 opened the first corrugated box factory west of the Mississippi River.

Small businesses, like Hill’s, are on the hook for a Kansas average $4,632 in annual premiums for individual workers’ coverage and $12,136 for family coverage, calculates America’s Health Insurance Plans, a health plan providers’ trade association in Washington, D.C.

The Patient Protection and Affordable Care Act’s health insurance exchanges are intended to help consumers shop for coverage in the same way airline travelers look for airfare bargains online.

Hill is opting out of the new exchanges by agreeing not to reduce Lawrence Paper’s current plan which under still evolving federal guidelines provides sufficient coverage. But he said he worries that as yet unwritten new federal regulations will wipe out that grandfathered-in status when circumstances change and force him to turn to the exchanges.

“There is absolutely no way I can afford that,” Hill said in Topeka where members of the Kansas Insurance Department, the Kansas Chamber of Commerce and the state chapter of the National Federation of Independent Business held the first of four informational meetings Monday to introduce the planned exchanges to business owners.

“What’s the point of having a state exchange if the federal government will dictate the rules anyway?” Hill said.

Although Kansas is one of 25 states suing the U.S. government to overturn the new health plan law that critics say is unconstitutional, because it forces consumers to buy insurance, the state also has received more than $32 million to become an early innovator in developing the electronic health insurance exchanges.

Kansas Insurance Commissioner Sandy Praeger, one of the state’s most visible promoters of the new exchanges, insists that such an effort makes sense.

Health-plan costs are prohibitively high for growing numbers of families, who are dropping coverage, Praeger said.

Without coverage, “people won’t get care, or they will wait to get more expensive care in [sic]
“If the law is overturned, we’ll still have those same problems,” she said. “We have to find a way to get everyone access to medical service.”

Kansas Chamber of Commerce President Kent Beisner also said it was necessary to develop the exchanges even though his organization opposes them politically.

“We support repealing the law,” Beisner said, “but we also have to protect the interests of the business community as called for in the plan.”

So, since January, state insurance regulators, Kansas business and insurance executives, medical services providers, information technology specialists, and others with a stake in health care have been meeting regularly to hammer out details for the proposed exchanges.

What they propose to create, in time for a federally set Jan. 1, 2014 deadline, is described as an online marketplace where insurance providers could list plans and prices for individual and group health plans that meet the requirements of the federal law and provide consumers with benefits covering between 60 and 90 percent of their actuarially estimated medical costs.

States that do not set up their own exchanges by the 2014 deadline will be required to use an exchange chosen by federal officials.

Marc Arrouet, an executive with Ceridian Corp., who also has been helping Florida set up a similar exchange, said the aim is to set up a simple selection and application process for consumers to complete online.

Costs for the exchanges are likely to vary from state to state, depending on how they build their exchanges, Arrouet said. But the online markets will be funded by part of the premium consumers and businesses pay.

That amount too will vary, but in Florida, which is further along in the process than Kansas, will be about two and a half cents of each premium dollar, he said.

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