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Baucus, Grassley Paper Describes Exchange

The SFC policy options paper, issued by Committee Chairman Max Baucus (D-Mont.) and minority ranking member Chuck Grassley (R-Iowa), describes a single national exchange that enables state-specific information to be displayed to residents. The exchange would:

1. Require all insurers that sell individual and small-group products to participate in the exchange. All insurers would be required to sell four standardized benefit options that have an actuarial value (defined as the percentage of health care costs covered by the product) ranging from 76% for the lowest option to 93% for the highest.

2. Allow individuals and very small groups to purchase the standardized products either through the exchange or buy products directly from an agent, broker or insurance company. All products, whether purchased inside or outside the exchange, would have to meet new rating and benefit requirements. And only individuals purchasing products through the exchange would be eligible for tax credits.

3. Require all individuals to purchase coverage, either through the individual or group market.

4. Initially limit participation to individuals and “micro-groups” of two to 10 employees.

5. Use a standard enrollment application and a standardized format for presenting insurance options.

6. Create marketing rules modeled on the Medicare Advantage (MA) program.

7. Establish rate schedules for broker commissions.

8. The HHS secretary could contract with a private entity to operate the exchange. The SFC policy options paper also suggests that several competing exchanges could be established in each state.