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Exchange Planning In Michigan Health Insurance

The 2010 health reform act, the Patient Protection and Affordable Care Act ("PPACA"), provides for the creation of health insurance "exchanges." Exchanges are programs designed to make it easier for eligible consumers and small businesses to compare and purchase health insurance coverage in a one-stop shopping format.  An Exchange is essentially a set of state regulated and standardized private health care plans, from which individuals may purchase health insurance that is eligible for federal subsidies. States choosing to create Exchanges are required to have them up and running by 2014.


Michigan, along with other states, is gearing up for the formation of its Exchange.  To that end, in February 2011, serious efforts began to carry out Michigan Exchange planning.  The main focus of the Exchange planning process was furthering the best interests of Michigan residents with regard to healthcare.  The three uppermost goals of healthcare are (1) quality assurance, (2) access to care, and (3) cost containment. All the goals are part of the PPACA as well as Michigan's oversight of insurance processes and the creation of the Exchange.


Under State aegis, several work groups were created to advise on the content, implementation and structure of Michigan's Exchange.  These workgroups included the following:

  1. Governance - to advise on Exchange governance and board structure;
  2. Business Operations - to plan for the smooth implementation of Exchange operations;
  3. Finance, Reporting, and Evaluation - to assist with accounting and ordering standards, as well as other issues focused on fostering information regarding quality, performance and costs for qualified health plans in the Exchange;
  4. Technology - to encourage and assist in designing the methodologies to help individuals and small businesses understand and use the Exchange; and
  5. Regulatory and Policy Action - to (a) review current law as it relates to Exchange functions and operations and (b) facilitate the establishment of the Exchange.  I participated in this workgroup.

Model Act

The National Association of Insurance Commissioners ("NAIC") prepared a model act for Exchanges, which was further reviewed and modified by the National Academy of Social Insurance ("NASI") in January 2011.  NASI added additional legislative options to the NAIC Act.  Each workgroup was assigned certain sections of the NASI/NAIC Model Act to review and make recommendations for adoption as a part of an Exchange statute for the State of Michigan.  The conclusions and recommendations of the workgroups were to be consolidated into a final report, which also gave attention to minority views.

Within the workgroups themselves, members reviewed sections of the Model Act and intensively discussed and considered its provisions.  Discussions within each workgroup were summarized in meeting minutes and were made available to all members of other workgroups and staff.  It is important to note that the entire process was conducted with true transparency.  Presumably the State will consolidate workgroup recommendations with regard to model language when creating a finalized Exchange statute in Michigan. 


A core area, in which all of the workgroups were in some way involved was education.  The importance of creating methods for the flow of information and assistance to consumers and small employers was emphatically emphasized.  The concept of navigators who will actually assist consumers in making the best individual choices was a major source of discussion within the Regulatory and Policy Action workgroup.  An important area of concern was assuring that consumers and small employers had clear choices as to what will provide them with the most value.  In the area of Governance, key questions were what kind of entity the Exchange should be and how its independence could be ensured despite its status as a recipient of assistance from state agencies and departments. 


The ultimate recommendation was for the Exchange to be an independent public authority with a board of directors sufficiently diverse to represent all sectors of health care and the public. Utilized in setting up the board was the experience of other states working through the same issues of board size and representation.  Ultimately, the recommendation was for a board of approximately 13 individuals.  These 13 individuals would include consumers, self-employed individuals, small employers, large employers, labor, the health insurance industry, health care providers, health care benefit specialists, an actuary, a health economist, and three ex-officio voting members from state agencies, excluding the insurance commissioner (who would serve as an ex-officio non-voting member of the Exchange board).


Hopefully, when established, Michigan's Exchange will serve the public well.  It should address the insurance needs of Michigan citizens with a flexible, open mind and avoid any appearance of bias or the furtherance of narrow special interests.

Categories: Health Care Reform, Health Insurance Exchange, Regulatory

Photo of Gilbert M. Frimet
Senior Attorney

Gil has over 48 years of health care and administrative law experience.  A prolific writer, many articles authored and co­authored by Gil have appeared in Health Care Weekly Review and numerous health and legal publications.

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