Health Benefit Exchange Ship Runs Aground on Political Realities in Virginia
Virginia’s legislature has decided that there will not be a health benefit exchange (“Exchange”) set up in Virginia this year, unless Governor Bob McDonnell decides to call a special session after the Supreme Court of the United States decides the constitutionality of the Patient Protection and Affordable Care Act (“PPACA”). Affected companies and individuals should closely follow the federal litigation, as well as moves by the Governor and Virginia General Assembly, for clues as to where the Exchange is headed in Virginia.
During the past year, the Virginia Health Reform Initiative (“VHRI”), overseen by Secretary of Health and Human Resources Dr. Bill Hazel, has wrestled with a number of issues pertaining to the establishment of an Exchange, including, among other things: where to house the Exchange, the make-up of the governing board of the Exchange, the resource needs of the Exchange and how to meet them, the functions to be performed by the Exchange, and the interaction of the Exchange with insurance markets and government programs such as Medicaid. The VHRI has worked hard to resolve many of the issues, as states are required to have their Exchanges approved by the United States Department of Health and Human Services (“HHS”) by January 1, 2013, and running by January 1, 2014.
In November, the VHRI sent a report to the Virginia General Assembly, which contained the recommendations of the VHRI on many topics. Notably, however, the Governor included a cover letter, which cast doubt on the willingness of the Governor to support the VHRI recommendations at the present time. The Governor alluded to the uncertainty caused by the litigation challenging PPACA, as well as decisions yet to be made by HHS. The Governor also restated his personal opposition to PPACA.
Notwithstanding this approach, seven Exchange bills were introduced in the 2012 session of the Virginia General Assembly by both Republicans and Democrats. All of the House of Delegates bills, HB 357, HB 402, and HB 464, have been tabled for the year. The Senate has taken a somewhat different approach. There, Senator John Watkins’ bill, SB 496, could become the vehicle by which an Exchange is created later this year, if the Governor decides to call a special session after the Supreme Court decision. SB 488, Senator Dick Saslaw’s Exchange bill, was incorporated into SB 496. SB 496 has been carried over until the 2013 session after an extended debate in subcommittee.
A key point of contention has been whether to house the Exchange at the State Corporation Commission, an independent department of government established by the Virginia Constitution, or whether the Exchange should be set up as a quasi-governmental agency of the Commonwealth. By having SB 496 as the only bill to be carried over, at least a part of the legislature has expressed its preference to have the Exchange housed at the State Corporation Commission. The other two Senate bills that would have created the Exchange as a separate quasi-governmental agency of the Commonwealth, SB 383 and SB 615, were rejected by a vote of 12 to 4 in the Senate Commerce and Labor Committee.
PPACA has begun to change the health care landscape dramatically across the country. In Virginia, interested parties should continue to watch moves by the Supreme Court, the Governor’s office, and the Virginia General Assembly for clues as to where the Exchange ship finally docks.
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