Health insurance companies hoping to compete for a share of an estimated half-million new customers in Illinois can begin submitting health plans Monday to the state for inclusion on the Illinois health insurance exchange.
Operated in a partnership between the state and federal governments, the Illinois exchange is an online marketplace where individuals and small businesses can begin buying health insurance starting Oct. 1 for coverage that begins in 2014.
State officials expect about 486,000 people to purchase health coverage via the exchange, a key component of President Barack Obama’s health care overhaul that requires individuals to carry health insurance or pay a penalty.
Insurers have a monthlong window to submit plans for state and federal approval.
Yvonne Clearwater, Illinois’ acting deputy director of health products, said a staff of about 20 workers in the state Department of Insurance will have until the end of July to review up to 400 separate health plans that the state expects will be submitted by dozens of insurers. From there, the plans will be sent to federal regulators, who have final say in approval.
Many insurers, including two of the three largest in Illinois, have been cautious about committing to participate in the exchanges, largely because of a tangle of new requirements set forth by the federal government that are still trickling in.
“While the application process starts (Monday), we continue to get guidelines. In fact we just got some more (Thursday),” said Bill Berenson, president of Aetna Inc.’s Illinois division, the state’s third-largest health insurer. “As we look at making final decisions, we want to make sure we’re taking a very balanced approach.”
Aetna, which offers individual health insurance in 24 states, has said it plans to participate in exchanges in up to 15 states this fall. While Berenson declined to say whether Illinois is one of those states, he said the market “is a very important one to the Aetna enterprise and one that we’re really committed to.”
UnitedHealthcare, the No. 2 insurer in Illinois, offered less insight on its plans.
In a statement, the company said that “there is a great deal to evaluate before pursuing the exchange in any market, and we’re holding back … until greater clarity can be established.”
United executives have said the company could submit plans in 10 to 25 states, though analysts expect the final number to be on the low end of the range.
The state’s largest insurer, by far, is Blue Cross & Blue Shield of Illinois. It plans on offering multiple insurance products on the exchange, said Kurt Kossen, vice president of retail markets for Health Care Service Corp., Blue Cross’ Chicago-based parent.
Blue Cross, which controls more than half of the health insurance market in Chicagoland, also operates the state’s largest small group plan that served as Illinois’ benchmark for essential health coverage.
All plans in the exchange must provide a baseline level of coverage, dubbed essential health benefits. Mandated items and services fall under 10 categories, including ambulatory care, prescription drugs and laboratory services.
Plans on the exchange also must adhere to stringent financial boundaries set for the actuarial value of each product, or the percentage of the cost of benefits they will pay.
Those requirements limit the creativity of insurers to offer differentiated products, which the government hopes will spur more competition on cost.
The plans insurers can begin submitting Monday also must include financial details, like monthly premiums, deductibles and copayment amounts.
But consumers won’t be able to see which companies are offering plans and at what prices until the exchange website goes live, likely in September after federal regulators finish their review.”