SPRINGFIELD -- Whether a key plank in the federal Affordable Care Act proceeds smoothly in President Barack Obama’s home state will be decided this week, when the Illinois General Assembly considers legislation to set up a statewide health-insurance exchange.

SPRINGFIELD -- Whether a key plank in the federal Affordable Care Act proceeds smoothly in President Barack Obama’s home state will be decided this week, when the Illinois General Assembly considers legislation to set up a statewide health-insurance exchange.


Points of contention include how much influence the insurance industry will have over the proposed exchange’s board, and whether funding for the exchange — estimated to cost anywhere from $57 million to $89 million annually after it begins operating in 2014 — will come solely from the industry.


Failure by the General Assembly to act this fall could jeopardize up to $92 million in startup funds from the federal government, according to one of Gov. Pat Quinn’s advisers.


“We are very concerned,” said Kate Gross, assistant director for health planning at the Illinois Department of Insurance.


Why not delay?


Amid nationwide polls showing falling public support for the Democratic president’s signature political achievement, some Republicans in the General Assembly question the need to pass legislation now.


Among other things, they say a delay would provide time for the U.S. Supreme Court to rule on the constitutionality of the Affordable Care Act’s requirement that all Americans have insurance coverage by 2014 or face tax penalties.


“We don’t think the timing is right,” said Sen. Bill Brady, R-Bloomington, who lost to Quinn in the race for governor last year and sat on a bipartisan panel of lawmakers that studied exchange issues.  “We think the scope of this and more details are needed to be decided in D.C. before we proceed.”


But Elena Butkus, a Chicago-based regional vice president for Aetna, said passage of legislation setting up basic functions of an exchange, including how it would be governed, is essential to give  Aetna enough time to design insurance products for the exchange’s initial enrollment period in 2013.


Aetna has problems with some parts of the current proposal, Senate Bill 1313, sponsored by Rep. Frank Mautino, D-Spring Valley. So does Phil Lackman, vice president of the Independent Insurance Agents of Illinois, who said Mautino’s bill would give the exchange board too much power and  troublesome authority to negotiate rates with insurance companies.


Butkus and Lackman both worry that the three remaining days in the fall veto session — Tuesday, Wednesday and Thursday — aren’t enough time for lawmakers to reach a compromise with the various interested groups and approve a bill for Quinn to sign into law.


“It’s a tall order,” Lackman said.


Mautino didn’t return phone calls for this story.


State vs. federal


The federal legislation sets the stage for state-level exchanges that operate as marketplaces to make comprehensive insurance available to the uninsured and small businesses. Exchanges also will distribute federally funded subsidies to ensure that coverage is affordable.


States that fail to set up their own exchange would see the federal government operate an exchange for them.


“If it’s one thing that we agree on in Illinois, it’s that we want an Illinois exchange,” Gross said. “The debate is really around what it looks like, not whether or not to have one.”


Brady, however, said it’s not clear whether a federally operated exchange would be a bad thing for Illinois. 


He dismissed the idea that legislation is needed this fall.


Blue Cross and Blue Shield of Illinois, the state’s largest health-insurance company, would like to see legislation approved this fall, but “also acknowledges that it can be done during the spring legislative session,” spokeswoman Mary Ann Schultz wrote in an emailed response to questions.


Jim Duffett, executive director of the Champaign-based Campaign for Better Health Care, a consumer advocacy group, said the campaign wants the legislation changed to prohibit insurance-industry representatives from sitting on the  proposed nine-member board.


“The fox shouldn’t guard the chicken coop,” Duffett said.


Mautino’s bill calls for seven of the nine members to be appointed by the governor with consent of the Senate.


But the Aetna and Blue Cross spokeswomen said insurance-industry expertise on the board would be invaluable, and Gross indicated Quinn is open to that argument.


“You want a balance across the different interests, with a protection against clear conflicts of interest,” Gross said. “The industry has a type of knowledge about insurance that normal people just don’t have, so there is some value in that.”


 


‘All eyes’ on Illinois


Mautino’s bill calls for unspecified “assessments or user fees” to fund the exchange, which would employ an estimated 50 people and use a website to help 1 million or more Illinoisans buy private insurance or qualify for a federally funded expansion in the Medicaid program.


Quinn supports that language on funding, which would give the exchange’s board the power to eventually specify the amounts of the assessments and who would pay them, Gross said.


Aetna believes the language of the bill would focus assessments on fully insured health plans such as Aetna, Butkus said. Aetna believes assessments should be shared by everyone who would benefit from the exchange, including health plans, health-care providers and consumers.


Quinn, a Democrat, wants lawmakers to pass a bill that he can sign into law so an exchange board can be appointed and staff can be hired by late 2011 or early 2012, Gross said.


But that may prove difficult. The Illinois House and Senate each would have to approve legislation by a three-fifths majority to allow immediate enactment. Such a supermajority would require support from all Democrats in each chamber, as well as one Republican in the Senate and eight in the House.


If the legislation wins approval by only simple majorities, it would go into effect June 1, Gross said. Federal startup funding wouldn’t be jeopardized, but enactment in June would complicate other logistics involved with the exchange, she said.


Despite the challenges, Illinois is farther along than most Midwestern states and is one of the largest states attempting to work through the thorny political issues, Butkus said.


“All eyes are on Illinois nationally,” she said.


Dean Olsen can be reached at (217) 788-1543.


Legislative committee to consider health-benefits exchange bill


The House Insurance Committee is scheduled to consider Senate Bill 1313 when it meets at 2 p.m. Tuesday in Room 114 of the Illinois Capitol.


Passage by the panel would send the bill to the floor of the House for a vote.


More information about the committee is available at http://tinyurl.com/5wh6bf9.


 


Health-insurance exchange details


*Under SB 1313, the exchange’s board would have nine voting members — seven appointed by the governor and two appointed by the attorney general.


*The governor’s appointees would have to include one consumer representative, one small-employer representative, one person employed by a small employer, one certified health actuary or health economist, one representative of organized labor, one Medicaid recipient, and one person from a “community-based provider that mainly serves vulnerable individuals living under 200 percent of the federal poverty level.”


*Of the attorney general’s appointees, one must be a lawyer “with experience with public programs such as Medicaid,” and one must be a lawyer “with experience working with the Attorney General’s Health Care Bureau.”


*Board members wouldn’t be salaried but would be reimbursed for expenses.


*The exchange would serve an estimated 776,000 people in 2014, its first year: 486,000 would be covered by various private-insurance plans, and 290,000 would be enrolled in Medicaid. By 2020, 1.7 million Illinoisans would be served by the exchange, 1.4 million through private-insurance plans, and about 300,000 through the Medicaid program.


Sources: Illinois General Assembly and Illinois Department of Insurance