Note: None of this should be taken as legal or tax advice.


The Utah Health Insurance Exchange was established in 2007 in an effort to provide a consumer-based alternative for small employers in Utah through the use of defined contribution health plans. However, the Exchange has experienced extremely poor participation to date.  This "pseudo defined contribution" solution is a bad product because the exchange:

1. Limits employee choice to "participating" insurance companies and plans 
2. Allows the health benefit plans to require 75% participation
3. Does not allow for portability of the health insurance policies outside of employment

1. Employee choice of any insurance company and plan
2. No minimum or maximum participation requirements
3. Unrestricted portability of health insurance

The state of Utah has already used $563,198 of taxpayers' dollars on the Utah Health Exchange since 2009, and has a current operating budget of $600,000/year for a staff of two. 

Note: None of this should be taken as legal or tax advice.

In July, 2010, the health reform bill created the Pre-Existing Condition Exclusion Plan (PCIP) to provide health insurance coverage to uninsurable citizens. Currently, 24 states (including District of Columbia) administer their own PCIP program. The federal government and HHS run the program on behalf of the remaining states.

Eligibility for PCIP is based on the following criteria:

• Legal citizen of the United States
• Uninsured for 6-months prior to application
• Denied an individual health insurance plan due to a pre-existing condition

State	Federal or State Run?	State Program Name (if applicable)	Additional PCIP Notes*
Alabama	Federal	N/A
Alaska	State	ACHIA-FED	$1500 deductible plan, rates from $468/mo (25 yr old) to $1310/mo (55 yr old)
Arizona	Federal	N/A
Arkansas	State	CHIP
California	State	California PCIP	$1500 deductible plan, rates from $180/mo (25 yr old) to $564/mo (55 yr old)
Colorado	State	GettingUSCovered	$2500 deductible plan, rates from $184/mo (25 yr old) to $486/mo (55 yr old)
Connecticut	State	CT PCIP Plan	$1250 deductible plan, rates from $285/mo (25 yr old) to $628/mo (55 yr old)
Delaware	Federal	N/A
District of Columbia	Federal	N/A
Florida	Federal	N/A
Georgia	Federal	N/A
Hawaii	Federal	N/A
Idaho	Federal	N/A
Illinois	State	IPXP	$2000 deductible plan, rates from $135/mo (25 yr old) to $368/mo (55 yr old)
Indiana	Federal	N/A
Iowa	State	HIPIOWA-FED	$1000 deductible plan, rates from $261/mo (25 yr old) to $435/mo (55 yr old)
Kansas	State	PCIP-KS	$2500 deductible plan, rates available via phone at 1-877-505-0511
Kentucky	Federal	N/A
Louisiana	Federal	N/A
Maine	State	DirigoChoice	Choice of three deductible amounts from $1250 - $2500
Maryland	State	MHIP	$1500 deductible plan, rates from $141/mo (under 30) to $354/mo (65 and over)
Massachusetts	Federal	N/A
Michigan	State	HIP Michigan	$1000 deductible plan, rates from $241/mo (25 yr old) to $563/mo (55 yr old)
Minnesota	Federal	N/A
Mississippi	Federal	N/A
Missouri	State	MHIP	Choice of three deductible amounts from $1000 - $5000 with plan rates from $271/mo (25 yr old) to $570/mo (55 yr old)
Montana	State	MAC Plan	$2500 deductible plan, rates from $219/mo (25 yr old) to $516/mo (55 yr old)
Nebraska	Federal	N/A
Nevada	Federal	N/A
New Hampshire	State	NHHP-FED	$1000, $2000, and $2500 deductible plan options, rates from $159/mo (25 yr old) to $520/mo (55 yr old)
New Jersey	State	NJ Protect	Several plan options with plan rates from $252/mo (25 yr old) to $440/mo (55 yr old)
New Mexico	State	NMMIP	$500, $1000, and $2000 deductible plan options, rates from $168/mo (25 yr old) to $409/mo (55 yr old)
New York	State	NY Bridge Plan	Zero deductible plan with standardized premium rates ranging from $362/mo to $421/mo, depending on geographic location
North Carolina	State	Inclusive Health	Choice of four deductible amounts from $1000 - $4500 with plan rates from $109/mo (25 yr old) to $276/mo (55 yr old)
North Dakota	Federal	N/A
Ohio	State	Ohio Risk Pool	Choice of $1500 or $2500 deductible amounts with plan rates from $130/mo (25 yr old) to $358/mo (55 yr old), depending on geographic location
Oklahoma	State	OHRP	$2000 deductible plan, rates from $137/mo (25 yr old) to $395/mo (55 yr old)
Oregon	State	Oregon Medical Insurance Pool	Choice of four deductible amounts from $500 - $1500 with plan rates from $266/mo (25 yr old) to $557/mo (55 yr old)
Pennsylvania	State	PA Fair Care	$1000 deductible plan, with average rate of $283/mo
Rhode Island	State	PCIPRI	$1000 deductible plan, with plan rates from $231/mo (25 yr old) to $520/mo (55 yr old)
South Carolina	Federal	N/A
South Dakota	State	SD Federal Risk Pool	$2000 deductible plan, with plan rates from $231/mo (25 yr old) to $535/mo (55 yr old)
Tennessee	Federal	N/A
Texas	Federal	N/A
Utah	State	Federal HIPUtah	Choice of four deductible amounts from $500 - $5000 with plan rates from $137/mo (25 yr old) to $271/mo (55 yr old)
Vermont	Federal	N/A
Virginia	Federal	N/A
Washington	State	PCIP-WA	Choice of $500 or $2500 deductible amounts with plan rates from $221/mo (25 yr old) to $606/mo (55 yr old)
West Virginia	Federal	N/A
Wisconsin	State	HIRSP-Federal	Choice of four deductible amounts from $500 - $3500 with plan rates from $113/mo (25 yr old) to $340/mo (55 yr old)
Wyoming	Federal	N/A

  
SRC:  Pre-Existing Condition Insurance Plan Website

The Utah Health Insurance Exchange launched last week for small employers in the state of Utah. The purpose of the exchange is to provide consumers with important information so that they can make informed decisions about their health insurance options. From an employers view, the exchange allows them to set up a defined contribution health plan and allow employees to choose different policies from the exchange.

How does the exchange work (my interpretation in simplest form)? Within the exchange, an employer can set a defined contribution towards the health benefits of their employees. Employees use the exchange to purchase from a limited number of personal policies. All costs are tax free.

With the exchange, there are some restrictions that are placed on the companies that are typically not in place with an ordinary HRA or section 125 plan for individual policies. Within the exchange, employees are restricted on which policies they can buy. Although not all details are available yet, I believe there will be limits on consumerism because of these restrictions.

There is also the restriction of how many people need to participate in the plan. This will limit the small business that typically doesn't offer health insurance because of cost. They will not be able to contribute as a company, and rallying enough of the employees to participate in a system that will be more expensive than the private market will make it difficult to amass the numbers to participate.

A third restriction I see has to do with the portability of the insurance purchased through the exchange. The insurance, although advertised as individual, is only transferable if the company you switch to is also using the exchange. This could result in employees still losing their coverage when they no longer work for the company or when a company decides to no longer participate in the exchange. On the other hand, HRAs that use the private market for insurance allow the employee to purchase insurance that is guarantee renewable until the age of 65.

One exciting thing about the exchange is that it offers guarantee-issue insurance for employees of companies that participate. This is similar to the current small group insurance regulations in the state, but the exchange offers some additional choice for the employees. The problem that could occur is that healthy companies might still go to the private market, while sick companies might flock to the exchange. This could cause some problems in the future with rising costs of the exchange.

I like the idea that Utah is moving closer to what my colleagues and I believe is the step toward correct reform. Look for more posts and my comments to come in the future.

To learn more about the flexibility of HRAs and section 125, and how any sized company can do this in Utah or any other state read more about it in this blog.